Double-Downgraded Pharma Stock Sinks 64%

Craig-Hallum also said it's time to sell ACET

by Karee Venema

Published on Apr 19, 2018 at 3:09 PM

The U.S. stock market is selling off today, as the 10-year Treasury yield trades near 2.93% -- its highest level since late February. Among individual stocks making big moves lower are pharmaceutical ingredients distributor Aceto Corporation (NASDAQ:ACET), semiconductor firm Qualcomm, Inc. (NASDAQ:QCOM), and tobacco titan Philip Morris International Inc. (NYSE:PM). Here's a quick look at what's pressuring shares of ACET, QCOM, and PM.

Aceto Shares Sink to New Low on Strategic Review

Aceto said it was undergoing a strategic review to address "persistent adverse conditions in the generics market," which includes cutting its dividend and potential credit waivers with lenders. The company also announced the resignation of Chief Financial Officer Edward Borkowski, projected $230 million-$260 million in impairment charges, and pulled its 2018 guidance.

In reaction, Canaccord Genuity double-downgraded the stock to "sell" from "buy," and slashed its price target by 80% to $2, saying the shares "could see significant pressure before it gets better." Craig-Hallum followed suit, lowering its rating to "sell" from "hold." Against this backdrop, ACET stock plunged to a 15-year low of $2.60 earlier, and was last seen trading down 63.5% at $2.70.

With the stock short-sale restricted, put volume is running at 86 times the average intraday pace -- with the 1,072 puts traded so far a new annual high -- as traders look for alternate ways to bet bearishly on ACET. Buy-to-open activity has been detected at the April 2.50 put, pointing to expectations for additional losses through front-month options expiration at tomorrow's close.

China Woes Exacerbate Qualcomm Stock's Slide

Chip stocks are getting whacked by Taiwan Semiconductor's (TSM) soft forecast, with Qualcomm shares last seen down 4.2% at $52.93. Pouring salt on the proverbial wound is news China may require the company to take additional steps to ease competition concerns before approving its takeover of NXP Semiconductors (NXPI), as well as a price-target cut to $79 from $86 at Canaccord Genuity.

QCOM is now trading at levels not seen since early November, and has given back 22% since its late-February highs near $67.60. A continued round of bearish brokerage notes could create even bigger headwinds for Qualcomm stock, too, especially if next Wednesday's earnings disappoint. There are still nine analysts that maintain a "buy" or better rating on the shares, while the average 12-month price target sits all the way up at $66.59.

Philip Morris Stock Plunges to New Low on Revenue Miss

Philip Morris is the worst stock on the S&P 500 Index (SPX) today, down 15.4% at $85.77, and earlier touching a two-year low of $83.52. Pressuring the shares is the tobacco firm's worse-than-expected first-quarter revenue of $6.9 billion -- impacted by a sharper-than-forecast decline in cigarette shipments.

The stock has brought its year-to-date deficit to 18.4%, and a round of bearish backlash seems likely. All but one of the 12 covering analysts maintain a "buy" rating, and the consensus 12-month price target is docked at $119.56 -- a 38% premium to current trading levels. Downgrades and/or price-target cuts could exacerbate Philip Morris stock's technical troubles.


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