Behind Lennar Stock's Post-Earnings Plummet

ACER stock is eyeing its worst day in years

by Lillian Currens

Published on Jun 25, 2019 at 3:01 PM

The Dow has reversed its course today, trading lower after Fed Chair Jerome Powell's speech. Several individual stocks are sinking too, including home construction concern Lennar Corporation (NYSE:LEN), as well as drug stocks Acer Therapeutics (NASDAQ:ACER), and Abbvie Inc (NYSE:ABBV). Here's a look at what's moving the shares of LEN, ACER and ABBV.

Lennar Stock Sinks on Tariff Comments After Earnings

LEN stock's second-quarter earnings and revenue beat had the construction concern starting the day strong, hitting a high of $53.25. The shares have since plummeted, though, after the firm said it was negatively impacted by tariffs imposed by Chinese goods, estimating a loss of about $500 per home on average. Lennar did, however, predict that margins would improve through the rest of 2019. 

The stock has lost 5.6% so far today, as a result, staring at its lowest close in almost three months at $48.56. What's more, LEN is set to settle beneath its 100-day moving average, which has acted as a recent area of support, for the first time since late-January. 

Unsurprisingly, LEN options are running hot today, with over 15,000 calls and 9,000 puts on tap, roughly 12 times what's normally seen at this point. The July 52.50 call is by far the most popular, where heavy open interest existed before today. New positions opening at the July 50 call suggests bulls expect the equity to recoup some of its losses by the time the contract expires on July 19.

ACER Stock Hits New Lows After FDA Rejection

The shares of ACER just bottomed out at an all-time low of $3.83 earlier, and are set for their biggest one-day drop since 2008, down 79.2% at $3.99, following the Food and Drug Administration's (FDA) complete response letter (CRL) rejecting its vascular Ehlers-Danlos syndrome treatment, Edsivo. Acer said it expects to respond to the FDA regarding further trials of the therapy by the third quarter of this year. 

Needham already downgraded to a "hold" from a "buy" rating, but the door is wide open for more drubbing from the brokerage bunch. Three analysts in coverage consider the security a "buy" or better. Plus, the consensus 12-month target price of $51.40 represents over a 1,000% premium to current levels. 

ABBV Stock Dips On Allergan Buyout 

AbbVie's buyout deal for Allergan (AGN) has the former on course for its lowest close since May 2017. The drugmaker bottomed out right at the $66 mark earlier today, and is now down 15.6% at $66.21. ABBV agreed to purchase the Botox-manufacturer for $63 billion in a cash-and-stock deal, with the intention of moving away from its reliance on Humira, the company's popular drug that faces patent expiry in 2023. Today's negative price action has also placed ABBV on the short sale restricted (SSR) list. 

Near-term call options were popular before today, going by the Schaeffer's put/call open interest ratio (SOIR). This reading of 0.54 ranks in the bottom percentile of its annual range, showing an unusual interest in short-term calls over puts -- a trend that's continuing today.

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