Analysts weigh in on the biotech company Oncothyreon Inc (USA) (NASDAQ:ONTY) and yoga apparel giant Lululemon Athletica inc. (NASDAQ:LULU), as both stocks are suffering losses on Wednesday. The analysts reflect on Oncothyreon’s recent clinical update, and Lululemon’s lackluster third-quarter results.
Oncothyreon Inc (USA)
Oncothyreon shares are falling nearly 25% to $2.36 after the company presented updated clinical data from its ongoing studies of ONT-380 at this year’s San Antonio Breast Cancer Conference (SABCS).
While the stock reacted negatively to the updated data, H.C. Wainwright analyst Mark Breidenbach remained positive, reiterating ONTY as a Buy with a $5.00 price target, which represents a potential upside of 107% from where the stock is currently trading.
Breidenbach commented, “The latest data includes top-line results from the study of ‘380 in combination with Kadcyla (TDM-1) in highly pre-treated patients with HER2+ metastatic breast cancer, demonstrating a manageable safety profile and strong signs of antitumor activity. Notably, 41% of patients with target lesions (14 of 34) achieved an ORR, and 59% of patients (23 of 39) had a clinical benefit. Additionally, an updated pooled analysis of patients with CNS lesions from four Phase 1b studies (last presented at ASCO 2015) continues to support the use of ONT-380 in patients with CNS mets.”
“We believe that the safety and efficacy data of various combination of ONT-380 could translate into a consolidated benefit when combined with conventional therapy, both in patients with CNS and non-CNS lesions. With a lead asset poised to enter a randomized Phase 2 trial and a pro forma cash position of $55.4M (which could sustain operations until early 2017), we believe Oncothyreon represents an attractive player in oncology space,” the analyst continued.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Breidenbach has a total average return of -23.1% and a 30.8% success rate. Breidenbach is ranked #3465 out of 3640 analysts.
Lululemon Athletica inc.
Lululemon shares are tumbling around 8% to $48.04 after the company reported third-quarter results, posting adjusted diluted earnings per share (EPS) of $0.35 on revenues of $479.7 million, compared with consensus estimates of $0.37 on revenues of $482.13 million respectively.
Canaccord analyst Camilo Lyon commented: “Relative to our model, the miss was driven by higher expense growth (-2c), partly offset by lower tax rate (+1c). Total comp growth (including DTC, cc) of 9% came in above our 7% estimate, but likely was at the expense of gross margin (-347bps). SG&A dollar growth of 20.5% came in well above our 17% estimate. Consistent with our channel checks, inventory growth (+56% vs. sales growth of 14%) continues to be worrisome as promotions will need to run deeper for longer to move excess product.”
“Overall, Q3 was a relatively uninspiring as weak gross margins likely drove much of the comp gain via high promotions. Guidance for Q4 of MSD comps and 75c-78c (well below our EPS estimate of 83c and consensus at 86c) implies more significant margin compression and/or accelerated expense growth — we think the former. Given these continued challenges around elevated inventory, we believe it is prudent to remain on the sidelines,” the analyst concluded.
According to TipRanks.com, analyst Camilo Lyon has a total average return of -2.5% and a 40.9% success rate. Lyon has a -15.9% average return when recommending LULU, and is ranked #3151 out of 3640 analysts.
Out of the 28 analysts polled by TipRanks in the last 12 months, 17 rate Lululemon stock a Buy, 8 rate the stock a Hold and 3 recommend a Sell. With a return potential of 39%, the stock’s consensus target price stands at $66.92.