2 Biotech Stocks Tanking; Goldman Downgrades TIF

Cowen cut its price target on nosediving VSAR to $3 from $45

by Patrick Martin

Published on Sep 22, 2017 at 10:03 AM

Analysts are weighing in on biotech stocks Versartis Inc (NASDAQ:VSAR) and Intercept Pharmaceuticals Inc (NASDAQ:ICPT), as well as luxury retailer Tiffany & Co. (NYSE:TIF). Here's a quick roundup of today's bearish brokerage notes on shares of VSAR, ICPT, and TIF.

VSAR's Drug Fail Leads to a Flurry of Bearish Analyst Attention

VSAR stock is currently down a whopping 86% to trade at $3.02, a new record low. Late Thursday, Versartis said its experimental drug somavaratan, a treatment for growth hormone deficiency in children, failed to meet its main goal in a late-stage study. As a result, the biotech stock received three downgrades, including to "underweight" from "overweight" at Barclays. VSAR stock also was hit with no fewer than five price-target cuts, including to $3 from $45 at Cowen. 

In the options pits, traders have preferred calls over puts lately. VSAR has a 10-day call/put volume ratio of 3.96 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which means calls have outnumbered puts by nearly a four-to-one ratio in the past two weeks. Should VSAR stock continue to crumble, it could lead to an unwinding of these bullish bets.

FDA Warning Prompts Analysts To Cut ICPT Price Targets

Intercept Pharmaceuticals is down 10.3% to trade at $66.12 -- a new three-and-half year low -- extending yesterday's slide, after the Food and Drug Administration (FDA) issued a warning that some patients were being incorrectly dosed with the company's liver disease drug, Ocaliva, which increases the risk of serious liver injury and death. The warning echoes that of an Intercept Pharmaceuticals letter earlier this month. As a result, three brokerage firms issued price-target cuts, including to $50 from $75 at Morgan Stanley -- territory not charted in four years. ICPT stock has shed 38.5% year-to-date.

Despite Intercept's fundamental concerns and the stock's poor performance lately, 10 of the 15 brokerages covering ICPT rate the shares a "strong buy" or "buy." This indicates that there is plenty of room for downgrades, should the equity continue to struggle.

Goldman Downgrades TIF Stock As New Chairman Is Named

Roger Farah, formerly of Ralph Lauren, was named Tiffany's new chairman last night, as the luxury retailer looks to jump-start growth. Goldman today downgraded TIF stock to "neutral" from "buy," while cutting its price target to $94 from $106. TIffany's stock is currently down 2.4% to trade at $87.72, on pace to breach its 200-day moving average, which contained the shares' pullback in August.
 
Options traders have been upping the bullish ante on TIF. The stock has racked up a 10-day ISE/CBOE/PHLX call/put volume ratio of 1.96 -- in the 79th percentile of its annual range, reflecting a healthier-than-usual appetite for Tiffany's calls over puts lately.

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