Why Vitae Pharmaceuticals Inc's (VTAE) Post-Earnings Slide Could Be Just the Beginning

Vitae Pharmaceuticals Inc (VTAE) could continue to explore new lows if bullish analysts change their minds

by Josh Selway

Published on Mar 4, 2016 at 10:46 AM

Biotech stock Vitae Pharmaceuticals Inc (NASDAQ:VTAE) hit an all-time low of $4.15 this morning, and was last seen down 54.9% at $4.42, following the company's fourth-quarter earnings report. Vitae posted a smaller-than-forecast loss for the quarter, but revenue underwhelmed. A discouraging note from the analyst community is also weighing on the stock.

Specifically, Stifel -- which formerly rated VTAE a "buy" -- lowered its opinion to "hold," saying it doesn't expect to hear any good news regarding the company's autoimmune disorder drug when data from its latest trial is released later in the quarter. (Interestingly, the drug produced positive top-line results back in November.) Additionally, the brokerage expressed concern that the drugmaker closed enrollment for the drug trial at 34 patients when it was expected to enroll 60. 

This may be just the beginning of VTAE's struggles. Aside from Stifel, every analyst that covers the stock rates it a "strong buy," meaning there's potential for others to follow its bearish lead. Even more alarming is the biotech's consensus 12-month price target of $21.67 -- almost five times the current share price, leaving the door wide open for potential price-target cuts.

Elsewhere, it doesn't look like short sellers are going away anytime soon. Short interest increased another 8.6% during the two most recent reporting periods. The roughly 1.8 million VTAE shares now sold short represent close to 16% of the stock's float, and at average daily volumes, it'd take bears almost 18 sessions to buy back their bets. 

Pessimism seems apt given Vitae Pharmaceuticals Inc's (NASDAQ:VTAE) technical performance. In 2016 alone, the shares have lost more than three-fourths of their value. More negativity from analysts combined with additional pressure from emboldened short sellers could spell trouble for VTAE. 

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