AMAG Stock Spirals on Negative FDA News

The stock is eyeing its biggest percentage drop in almost three years

Digital Content Manager
Oct 30, 2019 at 9:34 AM
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The shares of AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG) have been cast to the bottom of the Nasdaq today, following news that a Food and Drug Administration (FDA) advisory committee voted in favor of taking the firm's Makena drug, which is used to reduce the risk of preterm birth, off the market. An official FDA ruling is expected early next year.

The women's healthcare concern is down 26.3% at $9.82 in early trading, just one day after hitting an eight-month high of $13.53 yesterday. Now AMAG is slicing straight through its 80-day moving average -- a trendline that caught several pullbacks in recent months -- and is set to settle south of here for the first time since early August. What's more, the drugmaker is eyeing its biggest one-day drop in almost three years. 

The news has already attracted analyst attention. Piper Jaffray downgraded the security to "underweight" from "neutral" and slashed its price target to $6 from $9. This bear note joins the already underwhelmed brokerage bunch, which has given out seven "hold" or worse ratings, compared to only two "buys." What's more, the consensus 12-month price target of $11.50 was a nearly 15% discount to last night's close. 

While short interest declined in the last reporting period, the 13.41 million shares sold short still represent 40.16% of the stock's available float, and would take almost an entire month to cover at AMAG's average pace of trading.




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