ICPT Eyes Worst Day Ever on FDA Rejection

The stock was already down 37.5% this year

Deputy Editor
Jun 29, 2020 at 9:28 AM
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Intercept Pharmaceuticals Inc (NASDAQ:ICPT) is eyeing a steep plummet back towards its mid-March lows this morning, off 37.4% to trade at $48.51, after the Food and Drug Administration (FDA) declined to approve its progressive liver disease treatment. The FDA considered the therapy uncertain, weighing potential risks.

Should these morning losses hold, ICPT could be eyeing its biggest one-day drop on record, though already in the doldrums prior to today's nosedive. The stock was off 37.5% year-to-date, coming into today, contending with pressure at its 40-day moving average since a late-May bear gap. 

Surprisingly, the majority of analysts covering Intercept are quite bullish. Eleven of the 16 call it a "buy" or better, with not a single sell to be seen. This, paired with a lofty 12-month consensus price target of $143.22 -- which sits at a 195.3% premium to its Friday close -- leaves ICPT ripe for downgrades and/or price-target cuts. 

Short sellers, however, are coming out in droves, with short interest up 5.8% in the last two reporting periods. The 5.8 million shares sold short make up a hefty 22.2% of ICPT's available float. In other words, it would take almost nine days to cover these bearish bets at the equity's average pace of trading. 



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