Report Targets 82% Downside for Healthcare Stock

Call writing has been a popular strategy of AXGN options traders

Dec 18, 2018 at 2:42 PM
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The shares of AxoGen, Inc (NASDAQ:AXGN) are down 22% to trade at $21.47, fresh off an annual low of $19.21, after Seligman Investments posted a scathing report on Seeking Alpha. The investment firm -- which is short AXGN -- said the nerve repair specialist has a "dubious profile and prospects," and set a $5.07 price target, an 82% discount to last night's close.

AXGN options are running hot today, too, although volume is light on an absolute basis. At last check, 1,073 calls and 866 puts have changed hands -- 10 times what's typically seen at this point. The December 22.50 call is most active, and it looks like new positions are being initiated. More broadly speaking, the December 40 call is home to peak open interest of 893 contracts, and it looks like most of these were sold to open back on Nov. 19, when the shares were trading just above $28.

While the stock is down 22% since then, this downturn started back in July, shortly after AXGN hit a record high of $56.85. What's more, the security's formerly supportive 200-day moving average recently emerged as a newfound ceiling.

axgn stock chart dec 18

Analysts, meanwhile, are mostly upbeat -- putting the shares at risk of downgrades, which could fuel future selling. Five of the six covering brokerages maintain a "strong buy" rating, and the average 12-month price target of $45.60 is more than double AXGN stock's current price.




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