Glaucoma Drug's Flop Has OCUL Stock Spiraling

Several analysts, including Cowen and Raymond James hit the stock with downgrades

Deputy Editor
May 21, 2019 at 9:37 AM
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Pharma stock Ocular Therapeutix Inc (NASDAQ:OCUL) is in hot water today, down 11% at $3.00 in early trading, and pacing for its worst day since Dec. 3. The stock is fresh off a new record low of $2.78, too, after the company's glaucoma treatment, OTX-TP, fell short of its main goal in a late-stage study.

A round of bear notes is doing the equity no favors. Cowen and Company downgraded OCUL to a "market perform" from "outperform," and slashed its target price by a whopping $10 dollars to $3 a share, while Raymond James cut its rating to "outperform" from "strong buy," and dropped its target price to $5 from $11. Wainwright joined suit, cutting its price target to $9 from $12.

Considering the stock's longer-term technical troubles, this analyst drubbing feels long overdue. OCUL stock has been trading in a channel of lower highs and lows since a late-February spike, pressured by its declining 100-day moving average. Plus, Ocular Therapeutics has lost 56% year-over-year. Nevertheless, four "strong buy" ratings were on the table at last night's close, while the consensus 12-month target price of $10.17 more than doubles the security's current price.

Shorts are likely celebrating the equity's bear gap today, as short interest shot up over 14% in the last two reporting periods. The 8.4 million shares sold short represents a whopping 28.9% of the stocks available float, or nearly three weeks of trading at OCUL's average pace. However, these traders are sidelined today, with the stock landing on the short-sale restricted list.

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