Here’s Why Vericel Corporation (VCEL) Underperformed in Q3

Conestoga Capital Advisors, an asset management company, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets continued their momentum that began in early April, reaching new all-time highs in the third quarter. The Conestoga Micro-Cap Composite returned 11.7% net-of-fees in the third quarter, compared to the Russell Microcap Growth Index’s return of 19.9%. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2025.

In its third-quarter 2025 investor letter, Conestoga Capital Advisors 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 20.50%, and its shares lost 13.79% of their value over the last 52 weeks. On October 21, 2025, Vericel Corporation (NASDAQ:VCEL) stock closed at $36.45 per share, with a market capitalization of $1.839 billion.

Conestoga Capital Advisors stated the following regarding Vericel Corporation (NASDAQ:VCEL) in its third quarter 2025 investor letter:

“Vericel Corporation (NASDAQ:VCEL) markets MACI (autologous knee cartilage repair) and burn-care biologics. The stock underperformed as expectations cooled into quarter-end on concerns about near-term demand normalization; the subsequent Q2 print (7/31) featured a slight revenue miss and a negative stock reaction despite solid MACI growth, reinforcing caution on the pace of upside. Debate about how much MACI Arthro can expand the TAM also weighed on sentiment.”

Vericel Corporation (VCEL): Among Stocks with Insanely High PE Ratios Insiders Are Selling

Vericel Corporation (NASDAQ:VCEL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 14 hedge fund portfolios held Vericel Corporation (NASDAQ:VCEL) at the end of the second quarter, the same as in the previous quarter. In the second quarter of 2025, Vericel Corporation’s (NASDAQ:VCEL) total revenue increased 20%, while gross margin expanded to 74% and adjusted EBITDA increased 112%. While we acknowledge the risk and potential of Vericel Corporation (NASDAQ:VCEL) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Vericel Corporation (NASDAQ:VCEL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Vericel Corporation (NASDAQ:VCEL) and shared the list of best small cap stocks with the highest upside. In addition, please check out our hedge fund investor letters Q3 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.