The bearish brokerage notes come in reaction to the biotech's earnings report
The hits keep on coming for Clovis Oncology Inc (NASDAQ:CLVS), with the shares down 18.7% in electronic trading, set to open at a new two-year low of $13.50 per share. Today's premarket downside comes in reaction to the cancer specialist's wider-than-expected third-quarter loss of $1.71 per share. The Rubrica maker also said quarterly revenue came up short, and disclosed research and development costs will likely increase compared to the previous year.
Analysts have been quick to chime in, too. While J.P. Morgan Securities downgraded CLVS stock to "neutral" from "overweight," the brokerage firm joined at least three others in slashing their price target on the stock -- specifically, to $16 from $71. More broadly speaking, the majority of analysts in coverage still maintain a "buy" or better rating on Clovis Oncology, while the average 12-month price target sits all the way up at $53.70.
Elsewhere on the sentiment front, options traders had been loading up on long calls ahead of earnings. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CLVS' 10-day call/put volume ratio of 13.27 ranks in the 75th annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip.
However, Clovis Oncology is heavily shorted, so it's possible some of this call buying was at the hands of short sellers hedging against any post-earnings upside risk. The 8.8 million CLVS shares dedicated to short interest represent 17.2% of the stock's available float, or almost four times the average daily pace of trading.
Looking at the charts, this morning's sell-off just mirrors the stock's longer-term trend. Heading into today's trading, Clovis Oncology stock was down 78.2% year-over-year to trade at $16.61. Plus, the shares have shed nearly 37% since last week's bear gap, and are currently on track for their fifth straight monthly loss.