2 Drug Stocks Set to Drop; Mellanox Technologies Downgraded

Disappointing revenue numbers have shares of MLNX and AMGN sharply lower ahead of the bell

Oct 26, 2017 at 9:23 AM
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Analysts are weighing in on semiconductor stock Mellanox Technologies, Ltd. (NASDAQ:MLNX), as well as biotechs Amgen, Inc. (NASDAQ:AMGN) and Teva Pharmaceutical Industries Ltd (NYSE:TEVA). Here's a quick roundup of today's bearish brokerage notes on shares of MLNX, AMGN, and TEVA.

Mellanox Technologies Revenue Miss Draws Downgrade

Shares of Mellanox Technologies are bracing for a 6.6% drop out of the gate, after the company reported lower-than-expected third-quarter revenue and offered up a dismal current-quarter sales forecast. Making matters worse, J.P. Morgan Securities downgraded MLNX stock to "neutral" from "overweight" and joined at least two other brokerage firms in cutting their price targets.

The security's price action has been choppy since a late-April selloff, and Mellanox has struggled to fill this bear gap. If today's pre-market downside plays out, the stock could be at risk of more bearish brokerage notes, considering the average 12-month price target of $54 stands at a nearly 18% premium to last night's close at $45.80.

Amgen Stock Set to Drop on Disappointing Repatha Sales

No fewer than five brokerage firms cut their price targets on AMGN stock following the company's earnings report, including RBC to $188 from $192. Amgen said third-quarter profit came in above the consensus estimate and the firm boosted its full-year adjusted earnings forecast, but Repatha sales fell short.

Against this backdrop, Amgen shares are down 4.4% in electronic trading. Heading into today's session, the security was up 21.4% year-to-date, based on last night's close at $177.50. Nevertheless, most analysts have remained on the sidelines. Of the 20 brokerages following AMGN, 13 maintain a tepid "hold" recommendation.

Susquehanna Cuts Teva Stock Price Target in Half

Susquehanna slashed its price target on Teva Pharmaceutical stock to $20 from $40, after a U.K. high court said the drugmaker's Copaxone patent claim against rival Mylan (MYL) was "invalid based on obviousness." TEVA stock is down 2.4% ahead of the bell, set to open the session at levels not seen since April 2002.

A down day would just be more of the same for the security, which is down 61.6% year-to-date. More recently, the shares gapped lower in early October after Mylan received regulatory approval for a generic version of the multiple sclerosis drug, and closed last night at $13.93.

Short sellers have been ramping up their exposure, too, which likely created additional pressure for the shares. Short interest on TEVA jumped 52.8% in the most recent reporting period to 68.24 million shares -- the most in at least 15 years. Looking ahead, Teva Pharmaceutical will report third-quarter earnings ahead of the open next Thursday, Nov. 2.


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