Biotech Stock Hits Record Lows on FDA Hold

Stifel and Goldman Sachs chimed in with downgrades to ALLO

Deputy Editor
Oct 8, 2021 at 10:52 AM
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Allogene Therapeutics Inc (NASDAQ:ALLO) is plummeting this morning, down 42% to trade at $14.13 at last check, one of the worst stock's on the Nasdaq today. This comes after the U.S Food and Drug Administration (FDA) paused the company's cancer drug trials due to a chromosomal abnormality surfacing in one of the patients. The news has several analysts chiming in with bear notes. Goldman Sachs downgraded the stock to "neutral" from "buy," while Stifel slashed its rating to "hold" from "buy," with both adding in price-target cuts. No fewer than four other firms cut their price objectives as well. 

Today's steep bear gap sent ALLO to a record low of $13.70 earlier, and below all major moving averages. Year-over-year, the equity is now down roughly 65%. Before today's adjustments, 12 of the 13 analysts in coverage carried a "buy" or better rating on Allogene Therapeutics stock, with one a tepid "hold," leaving plenty of room for further downgrades.

The stock's typically quiet options pits are bursting with activity this morning, with options volume running at 130 times the typical intraday average. So far, 1,587 calls and 1,422 puts have crossed the tape. The October 15 call is the most popular, followed by the 12.50 put in the same monthly series, with new positions being bought to open at both.

ALLO options are well-priced at the moment. The stock's Schaeffer's Volatility Index (SVI) of 64% stands higher than 10% of all other readings in its annual range, implying that options players are pricing in low volatility expectations at the moment. 




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