Analyst Update: Square Inc, Zafgen Inc, and Mallinckrodt PLC

Analysts adjusted their ratings on Square Inc (SQ), Zafgen Inc (ZFGN), and Mallinckrodt PLC (MNK)

by Kirra Fedyszyn

Published on Dec 3, 2015 at 11:29 AM

Analysts are weighing in today on payment specialist Square Inc (NYSE:SQ) and pharmaceutical stocks Zafgen Inc (NASDAQ:ZFGN) and Mallinckrodt PLC (NYSE:MNK). Here's a quick roundup of today's brokerage notes on SQ, ZFGN, and MNK.

  • SQ is celebrating two weeks since hitting the market by climbing 0.5% to trade at $11.99 today, after Monness Crespi Hardt initiated coverage on the stock with a "buy" rating and a $15 price target -- exactly mirroring BTIG's bullish initiation on Wednesday morning. Square Inc priced its initial public offering (IPO) at $9, and climbed to $13.07 by the close of its first day. However, the shares have since leveled off, sticking fairly close to the $12 level for the last week and a half. While analysts seem upbeat, not everyone is on board -- short sellers have been targeting the stock, with about 85% of shares available for lending being snapped up already.

  • After gapping dramatically lower on negative drug trial news yesterday, ZFGN is feeling the pressure again today. The stock is down 4% at $6.03, and earlier hit a fresh record low of $5.73 -- marking its second all-time low in as many days. After the biotech announced late Wednesday that its scandal-plagued beloranib trial had been placed on complete clinical hold by the Food and Drug Administration (FDA), Suntrust Robinson cut its rating on Zafgen Inc to "neutral" from "buy," and its price target to $7 from $25. Meanwhile, Leerink slashed its price target on ZFGN for the second day in a row, dropping it from $7 to $11. Short sellers may be cheering the stock's continued losses, as short interest on ZFGN increased by more than 23% over the last two reporting periods, and now accounts for 12.9% of the stock's available float.

  • MNK got a boost today, adding 2.3% to trade at $74.04, after Morgan Stanley raised its rating on the stock to "overweight" from "equal weight," and its price target to $88 from $74. Mallinckrodt PLC is fighting to gain back some of its 25% year-to-date loss; the shares dropped to a 52-week low of $52.01 early last month when short seller Citron Research called out the drugmaker for price gouging. Citron never followed up on its ominous claim, however, and the stock has been muscling its way higher ever since. Still, options traders remain bearish on MNK -- its 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 4.84, which ranks higher than 88% of comparable readings from the past year.
For other stocks in analysts' crosshairs, read Analyst Upgrades: Avago Technologies Ltd, Costco Wholesale Corporation, and Palo Alto Networks Inc and Analyst Downgrades: JPMorgan Chase & Co., Chesapeake Energy Corporation, and Verint Systems Inc.

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