Zynerba Pharmaceuticals Stock Plunges on Failed THC Trial

Analyst ratings are firmly optimistic on the drug stock

Managing Editor
Jul 5, 2018 at 9:11 AM
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Shares of drug concern Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE) have plunged in pre-market trading, after the company reported top line results for a Phase 1 trial of its ZYN001 tetrahydrocannabinol (THC) transdermal patch. While the drug was well tolerated, target blood levels were not achieved. ZYNE is down 21.9% at $7.51 ahead of the bell, on track to open at a new year-to-date low.

Zynerba Pharmaceuticals stock has been an underperformer on the charts since last year's mid-April peak near $26, having shed nearly 44% over the past 52 weeks. The stock's recent rally attempt was turned away by the $12.50 mark, which also coincides with its year-to-date breakeven level.

Despite the stock's underwhelming performance on the charts, analyst ratings are leaning optimistic. Currently, eight firms are covering the drug stock, with five sporting a "strong buy" recommendation. Further, ZYNE's average 12-month price target comes in at $17.50 -- representing a more than 80% premium to Tuesday's close.

Short interest fell 4% during the past two reporting periods, but ZYNE remains heavily shorted; these bearish bets account for 23% of the stock's total available float, or 12.4 times its average daily trading volume. However, given the magnitude of today's pre-market sell-off, Zynerba shares appear to be headed for the short-sale restricted list.

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