2 Stocks Sinking on M&A Doubts

AKRX stock is pacing for its worst day ever

by Patrick Martin

Published on Feb 27, 2018 at 3:24 PM

U.S. stocks have struggled today, as markets digest new Fed Chair Jerome Powell's latest comments in Washington, D.C. Among specific equities trading lower are drug store stock Walgreens Boots Alliance Inc (NASDAQ:WBA), generic drugmaker Akorn, Inc. (NASDAQ:AKRX), and health products retailer Vitamin Shoppe Inc (NYSE:VSI), Here's a closer look at what shares of WAG, AKRX, and VSI are reacting to today.

M&A Buzz Sends Walgreens Stock Lower

Walgreens stock is down 2.2% to trade at $69.07, amid reports that talks to buy AmerisourceBergen (ABC) have ended. According to CNBC, both companies' CEOs met to iron out details, but the merger talks ended without an agreement.

WBA shares have shed nearly 21% year-over-year, and have been staring up at their formerly supportive 40-day moving average all February. Despite the stock's struggles, analysts have remained in WBA's corner. Exactly 10 of the 16 brokerages covering WBA stock rate it a "buy" or "strong buy." Furthermore, the security's average 12-month price target of $85.96 is roughly 25% higher than the stock's current perch. This indicates the door is wide open for a round of downgrades and/or price-target cuts.

Deal Doubts Also Sink Akorn Stock

Shares of Akorn Inc are also getting pummeled on M&A concerns, down 36.5% to trade at $19.22 -- the worst on the Nasdaq today. Weighing on the stock are concerns about the planned acquisition of Akorn by Germany's Fresenius, the latter of which said it's conducting an independent investigation into the former's "alleged breaches" of Food and Drug Administration (FDA) data integrity requirements. Still, both firms are seeking Federal Trade Commission (FTC) clearance for the merger.

AKRX stock is pacing for its worst single-day loss of all time, and fell to an annual low of $18.72 earlier today. After the Fresenius buyout news in mid-2017, the shares spent the rest of last year trading just south of  $34, but have dropped more than 41% year-to-date.

CEO Shakeup Sinks Vitamin Shoppe Stock

Shares of Vitamin Shoppe are down 13.6% to trade at $3.80 -- one of the worst on the New York Stock Exchange (NYSE) today-- after the company's CEO Colin Watts announced his departure for May. In addition, the company's fourth-quarter sales fell short of expectations.

VSI stock is now on track for its worst single-day loss since Nov. 8. The shares have given back 13% so far in 2018, with their 120-day moving average providing stiff resistance lately. What's more, Vitamin Shoppe's shake-up -- along with dismal earnings from sector peer NutriSystem (NTRI) -- are weighing on Weight Watchers (WTW) stock ahead of earnings tonight.

Although VSI stock is currently on the short-sale restricted (SSR) list, plenty of short sellers are rejoicing today. Short interest increased by 12.8% during the last reporting period, to 6.12 million shares. This represents a whopping 38% of VSI's total available float.


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