Valeant Pharmaceuticals Stock Sweats Under Tax Spotlight; TRIP Tanks on Weak Forecast

Valeant's Australian subsidiaries are under tax audit

Aug 9, 2017 at 1:05 PM
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U.S. stocks are trading lower today, as traders digest escalating tensions between the U.S. and North Korea. Among the names in the spotlight are travel site TripAdvisor (NASDAQ:TRIP), drug stock Valeant Pharmaceuticals Intl Inc (NYSE:VRX), and healthcare services company Surgery Partners Inc (NASDAQ:SGRY). Here's a quick look at what's moving shares of TRIP, VRX, and SGRY.

TripAdvisor Tanks After Disappointing Forecast

Although TripAdvisor's second-quarter earnings beat Wall Street's expectations, the travel stock is down 4.7% to trade at $37.69 -- and earlier came within pennies of a five-year low-- due to the firm's disappointing current-quarter forecast. Shares of sector peer Priceline stock are also down due to a weak forecast. Down 38% year-over-year, TRIP has been in a channel of lower highs and lows since mid-2014, with recent rebound attempts capped by its 80-day moving average.

Although TRIP stock is on the short-sale restricted (SSR) list today, plenty of shorts are likely cheering today's decline. Short interest represents more than 16% of TRIP's total available float. At the stock's average daily trading volume, it would take more than two weeks to buy back all the shorted shares. 

Tax Audit Pushes Valeant Stock Down

Valeant Pharmaceuticals stock is down 8% to trade at $14.39, after the drugmaker said its Australian subsidiaries are under audit by the Australian tax office. As of yesterday's close, the pharmaceutical stock was up nearly 90% from its April 24 low, but today's slide has VRX shares back in the red year-to-date, and testing their 200-day moving average.

Near-term options are attractively priced after Valeant stock's post-earnings volatility crush, as evidenced by VRX's Schaeffer's Volatility Index (SVI) of 52% -- higher than just 9% of all other readings from the past year. Plus, the stock's Schaeffer's Volatility Scorecard (SVS) of 86 indicates the shares have exceeded options traders' volatility expectations over the past year.

Surgery Partners Stock Plunges After Earnings

Weaker-than-expected second-quarter revenue and disappointing guidance have knocked Surgery Partners stock down 35.4% to trade at $12.37. The shares are now trading below their 200-day moving average for the first time in three months, and earlier touched a record low of $9.20.

Today's bear gap ranks SGRY as the worst percentage loser on the Nasdaq, and sparked downgrades from Raymond James, Keybanc, and Stifel -- the latter cutting its recommendation to "sell," and slicing its price target to $17 from $21. Five of the seven analysts following the stock rate it a "strong buy," leaving ample room for bearish analyst attention.


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