Impax Laboratories Inc (IPXL) Bucks Bearish Expectations

Impax Laboratories Inc (IPXL) plans to cut over 200 workers as part of its restructuring plan

by Alex Eppstein

Published on Mar 9, 2016 at 2:56 PM
Updated on Jun 24, 2020 at 10:16 AM

Unlike one sector peer, Impax Laboratories Inc (NASDAQ:IPXL) is on a tear today, after the drugmaker's board of directors approved a restructuring plan. Expected to achieve an annualized cost savings of up to $27 million starting in 2017, the plan will include a workforce reduction upwards of 200 positions.

As alluded to, IPXL has put in a strong showing today, with the drug stock last seen 4.5% higher at $33.99. Historically speaking, this is unusual. The shares have surrendered more than one-fifth of their value in 2016, and late last month hit an annual low of $29.66.

Therefore, it comes as little surprise that Wall Street is in IPXL's bearish corner. In terms of options, short-term traders have gravitated toward puts relative to calls, as evidenced by the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.92 -- ranking in the 71st annual percentile.

Likewise, analysts and short sellers have taken a glass-half-empty approach. While short interest has decreased in recent reporting periods, nearly 12% of IPXL's float remains sold short. At the stock's typical trading levels, it would take over two weeks to cover these bearish bets.

Also, seven of nine analysts tracking Impax Laboratories Inc (NASDAQ:IPXL) have doled out a "hold" or worse rating. About the only sign of optimism among the brokerage crowd is the stock's average 12-month price target of $41.46, which stands at a nearly 23% premium to its current perch.

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