Penny Stock at Bottom of Nasdaq After Scrapped Drug Plans

Zafgen halted plans for another experimental drug

Managing Editor
Mar 12, 2019 at 10:30 AM
facebook twitter linkedin

The shares of Zafgen Inc (NASDAQ:ZFGN) are down 32.2% to trade at $3.43, one of the worst stocks on the Nasdaq this morning, under pressure from a double-dose of negative headlines. First, the drugmaker pulled plans for its experimental drug for rare diseases due to anomalies in animal trial data. What's more, the company announced its Chief Medical Officer resigned, effectively immediately.

Zafgen stock earlier tapped a fresh two-year low of $3.19. ZFGN was destroyed late in 2018 after another of its experimental drugs was put on clinical hold by the Food and Drug Administration (FDA). After that late-November bear gap, the equity spent most of the time consolidating below the $5.50 mark. Even prior to today's drop, ZFGN had shed 7% in 2019. 

Leerink responded to the news today with a price-target cut to $6 from $9. There could be plenty more bearish analyst attention on the way, too. Exactly three-quarters of the brokerages in coverage rate ZFGN a "strong buy," with zero "sells on the books. Plus, the stock's consensus 12-month price target of $8.40 is a 82.6% premium from last night's closing perch at $4.60. 

There's also ample room aboard the bearish bandwagon. Short interest increased by 5.6% in the most recent reporting period, but the 2.9 million shares sold short is less than half the 2018 highs. Plus, it only represents a slim 2.4% of ZFGN's total available float. Today's drop puts the stock on the short-sale restricted list, however.


Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Schaeffer's Daily Bulletin Offer


Special Offers from Schaeffer's Trading Partners