Here's Why Vericel Corp. (VCEL) Traded Down in Q2

TimesSquare Capital Management, an equity investment management company, released its “U.S. Small Cap Growth Strategy” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. During the quarter, the fund returned 11.28% (gross) and 11.02% (net), compared to the Russell 2000 Growth Index by 11.97%. Equities posted double-digit returns in the second quarter as global economic activity measures lifted. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, TimesSquare Capital Small Cap Growth Strategy highlighted stocks such as Vericel Corporation (NASDAQ:VCEL). Vericel Corporation (NASDAQ:VCEL) is a commercial-stage biopharmaceutical company. The one-month return of Vericel Corporation (NASDAQ:VCEL) was 7.58%, and its shares lost 26.90% of their value over the last 52 weeks. On September 11, 2025, Vericel Corporation (NASDAQ:VCEL) stock closed at $33.53 per share, with a market capitalization of $1.692 billion.

TimesSquare Capital U.S. Focus Growth Strategy stated the following regarding Vericel Corporation (NASDAQ:VCEL) in its second quarter 2025 investor letter:

"Our preferences among Health Care stocks are those companies providing novel therapies for unmet needs that deserve premium pricing, or specialized service providers. Vericel Corporation (NASDAQ:VCEL) engages in the development of cellular therapies and specialty biologic products for sports medicine and severe burn care. Its MACI portfolio is an FDA-approved product that applies the process of tissue engineering to grow cells on scaffolds using healthy cartilage tissue from the patient’s own knee. The Epicel portfolio provides skin replacement for patients who have deep dermal or full thickness burns. While the overall first quarter was in line with Street estimates, burn care results came in below the guidance range and that caused its shares to fall by -5%."

Vericel Corporation (NASDAQ:VCEL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 14 hedge fund portfolios held Vericel Corporation (NASDAQ:VCEL) at the end of the second quarter, which was 14 in the previous quarter. In the second quarter of 2025, Vericel Corporation's (NASDAQ:VCEL) total revenue increased 20% in the quarter, while gross margin expanded to 74% and adjusted EBITDA increased 112%. While we acknowledge the potential of Vericel Corporation (NASDAQ:VCEL) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Vericel Corporation (NASDAQ:VCEL) and shared the list of best small-cap growth stocks to buy. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.