Drug Stock Sinks on Bernie Sanders Headwinds

Meanwhile, analyst talk of a FAANG buyout has Sonos stock soaring

Feb 4, 2019 at 2:42 PM
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U.S. stocks have swung higher today, as traders gear up for Alphabet (GOOGL) earnings. Meanwhile, three names making sharp moves today are smart speaker manufacturer Sonos Inc (NASDAQ:SONO), drugmaker Catalyst Pharmaceuticals Inc (NASDAQ:CPRX), and equipment leasing expert Triton International Ltd (NYSE:TRTN). Here's what's moving shares of SONO, CPRX, and TRTN today.

SONO Up on AAPL Takeover Suggestion

SONO shares are trading up 7.1% at $13.03, after J.P. Morgan Securities mentioned the company -- alongside Netflix (NFLX) and Activision Blizzard (ATVI) -- as an ideal takeover target for Apple (AAPL). While the covering analyst called NFLX the "best strategic fit," they also said buying Sonos could help Apple catch up to Amazon (AMZN) and Google in the smart home speaker space.

This is pacing to be Sonos stock's seventh straight daily gain -- its longest ever. The company just went public this past August, and the security quickly jumped to its highest point ever at $23.60, but it's essentially been in a downtrend since, briefly exploring single-digit territory around the turn of the calendar year. SONO hasn't been north of its initial public offering (IPO) price of $15 since early November. Short sellers have certainly set their sights on the tech concern, with these bears controlling 8.01 million shares, or 11 times the stock's average daily trading volume.

CPRX Shares Sink on Sanders Interest

CPRX is feeling the wrath of Bernie Sanders today. The stock is trading down 4.6% at $2.39, on news the independent Vermont senator is questioning why the company's drug, Firdapse, suddenly costs $375,000 after being free for years under the Food and Drug Administration's (FDA) "compassionate use" program. In his letter to Catalyst's CEO, Sanders called the price hike "an immoral exploitation of patients who need this medication," which treats a rare neuromuscular disease.

Catalyst Pharmaceuticals stock has been weak on the charts for months, struggling beneath its 60-day moving average, and is down almost 28% year-over-year. Meanwhile, analysts are overwhelmingly bullish on the penny stock, as all six in coverage sport "strong buy" recommendations. Not everyone's optimistic, though, with short interest jumping 49% in the last reporting period.

Downgrade Pressures TRTN Shares

TRTN stock was downgraded to "underperform" from "buy" at BofA-Merrill Lynch, which also trimmed its price target to $32 from $35, citing a slowdown in China as one reason for the bearish move. The shares are down 9.8% at $32.02 as a result, slicing through a recent foothold atop the 20-day moving average.

Today's price action has resulted in unusual options activity on Triton. Calls and puts are both crossing well above the average pace, and the most popular contract is the March 35 call, where new positions are being opened. However, it's not clear if traders are buying or selling to open contracts here. In any case, more than 2,180 TRTN calls have changed hands today, surpassing the previous annual high of 2,166 calls traded on July 31.
 

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