3 Drug Stocks Making Outsized Moves

Analysts called CALA and ACER underappreciated small-caps

by Patrick Martin

Published on Feb 16, 2018 at 1:09 PM
Updated on Jun 24, 2020 at 10:16 AM

U.S. stocks are climbing today, and at last check, all three benchmarks are headed for some impressive win streaks. Among stocks making notable moves today, drugmaker Pacira Pharmaceuticals Inc (NASDAQ:PCRX) is struggling, while fellow pharmaceutical stocks Calithera Biosciences Inc (NASDAQ:CALA) and Acer Therapeutics (NASDAQ:ACER) are surging higher. Here's a closer look at what shares of PCRX, CALA, and ACER are reacting to today.

FDA Committee Vote Sinks Pacira Pharmaceuticals Stock

Pacira Pharmaceuticals stock is down 16% to trade at $30.33, and earlier fell to a five-year low of $29.35, taking its place among the worst on the Nasdaq today. PCRX shares are now short-sale restricted, after a Food and Drug Administration (FDA) panel voted against the usage of Exparel as a nerve block treatment for anesthesia. The FDA committee members believe more research is needed to support the usage as a regional anesthetic.

In response, four brokerages chimed in with price-target cuts for PCRX stock, including to $32 from $41 at BMO Capital. Mizuho, on the other hand, said that while the FDA panel recommendation has lowered the prospects of a Pacira takeover, the company's base business could make it an attractive acquisition target for Johnson & Johnson (JNJ).

Citigroup: Calithera Stock Could Double

Calithera Biosciences stock is up 19% to trade at $8.27 -- the best stock on the Nasdaq today -- after Citigroup upgraded the biotech to "buy" from "neutral." The analyst called CALA stock an "underappreciated small-cap," and issued a $14 price target -- more than twice yesterday's close of $6.95.

In response, CALA shares are trading above their 50-day moving average for the first time since a mid-November plunge. CALA stock is on track for its best day since March 2017, but is still down roughly 50% in the past nine months. 

A short squeeze could give CALA's rally some legs. Short interest represents a hefty 14% of CALA's total available float, and nearly eight times the stock's average daily trading volume. A capitulation by these remaining bears could send CALA sharply higher over the short term.

William Blair Upgrades Acer Therapeutics

Shares of Acer Therapeutics are up 6.5% to trade at $18.00, after William Blair initiated coverage on the biotech stock with an "outperform" rating. The analyst waxed optimistic on the company's treatment for a rare connective tissue disease, and believes Acer will move "from an overlooked small-cap development stage company to an attractive fully commercialized organization over the next year." ACER stock has more than tripled since its June lows, with pullbacks contained by its 80-day and 160-day moving averages.

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