3 Pharma Stocks at Risk for Downgrades

AGIO, ABMD, and SRPT stocks may be ripe for a bearish trade

Oct 2, 2019 at 12:00 PM
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Drug stocks have underperformed recently, with just 19% of the 130 stocks we track under the "Pharmaceuticals & Biotechnology" umbrella trading north of their 80-day moving average. Analysts have barely budged in their bullish outlooks, though, with 65% of those covering these stocks still maintaining a "buy" rating -- putting the sector at risk for downgrades, which could create bigger headwinds.

Three names in particular that popped up on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks at risk for downgrades are artificial heart maker Abiomed, Inc. (NASDAQ:ABMD), cancer specialist Agios Pharmaceuticals Inc (NASDAQ:AGIO), and gene therapy name Sarepta Therapeutics Inc (NASDAQ:SRPT). This trio of stocks is currently sporting sharp year-to-date deficits alongside a majority of analyst "buy" ratings.

More specifically, Abiomed stock has shed 48% year-to-date -- bottoming at a two-year low of $163.40 earlier, and last seen down 1.1% at $168.33. Nevertheless, six of nine brokerages call the shares a "buy," or better, while the average 12-month price target of $256.43 is a nearly 53% premium to current trading levels. Bear notes could send ABMD shares to new lows.

abmd stock daily price chart on oct 2

Agios Pharmaceuticals, meanwhile, is down 1.8% at $32.97, bringing its 2019 loss to 28%. The shares have recovered slightly from their Sept. 30 five-year low at $31.46, but are still stuck beneath their 10-day moving average. There's room for more analysts to follow in the footsteps of RBC, which cut its AGIO price target yesterday, considering the consensus 12-month price target sits all the way up at $72. Plus, nearly 86% of covering analysts still say the stock's a "strong buy."

agio stock daily price chart on oct 2

Sarepta Therapeutics has surrendered more than 30% so far this year, down 1.4% today at $75.46. The stock's recent rally attempt off its Sept. 26 17-month was quickly halted by its 10-day moving average, and more downside could be ahead should analysts revise their upbeat ratings. Currently, 15 of 16 brokerages say SRPT stock is a "buy" or better, and the average 12-month target price of $190.76 is perched well above the equity's June 2018 record high of $176.50.

srpt stock daily price chart on oct 2


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