Red flags were thrown up by analysts today regarding the prospects of biotech company CTI BioPharma Corp (NASDAQ:CTIC) and solar-leasing giant SolarCity Corp (NASDAQ:SCTY). The analysts reflect on CTI’s clinical setback and SolarCity’s disappointing earnings.
CTI BioPharma Corp
CTI BioPharma shares are collapsing, down around 40% at time of writing, after the company disclosed that the FDA has placed the Company’s IND for pacritinib on full clinical hold. As a result, the Company has withdrawn its New Drug Application.
In reaction, Piper Jaffray analyst Charles Duncan downgraded shares of CTI BioPharma from Overweight to Neutral, while slashing the price target to $0.75 (from $4.00), which implies an upside of 50% from current levels.
Duncan commented, “While we are not yet certain of long-term implications for the program, the FDA has requested additional data, and possibly trials, and CTI has pulled its NDA. Clearly, this introduces greater risk and longer timelines and financial investment for the program, even if it is an approvable drug for a high-risk population in the long run. Therefore we’re downgrading to Neutral in advance of greater visibility. Our new PT is $0.75, as we have pushed first US sales to 2019, decreased penetration to account for possible labeling, and increased discount rate on pac’ revs to 25%.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Charles Duncan has a yearly average return of -13.6% and a 26.6% success rate. Duncan has a -47.5% average return when recommending CTIC, and is ranked #3450 out of 3560 analysts.
Out of the 3 analysts polled by TipRanks in the last 3 months, one analyst is bullish on CTIC stock, one is neutral, and one is bearish. With a return potential of more than 1000%, the stock’s consensus target price stands at $4.00.
Roth Capital analyst Philip Shen downgraded shares of SolarCity from Buy to Neutral, while slashing the price target to $19 (from $65), after the company posted a fourth-quarter miss and a weak first-quarter guide. SolarCity shares reacted to the news, falling nearly 29% to $19 on heavy volume, making it among the top losers today.
Shen commented, “We had previewed the potential for a healthy Q4 and Q1 volumes that needed to be at least 215MW. What investors got was much more disappointing, despite an ITC extension resulting in a robust long-term outlook. The last quarter was supposed to be the “kitchen sink” quarter that resulted in lowered expectations. One quarter later, the company delivered another miss on NV (out of company’s control) and commercial timing. Sentiment in the stock is clearly negative, and we think the recipe for fixing it requires two ingredients: (1) Steady and better-than-expected execution over time and (2) Healthy and robust access to ABS and the capital markets —also over time. We are downgrading to Neutral until we have more answers than questions around execution, which we frame out below.”
The analyst concluded, “With two challenged quarters and lack of clarity on when things may improve, we are downgrading to Neutral until management starts delivering on expectations.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Philip Shen has a yearly average return of -17% and a 24% success rate. Shen has a -28.4% average return when recommending SCTY, and is ranked #3516 out of 3560 analysts.
Out of the 18 analysts polled by TipRanks, 13 rate SolarCity stock a Buy, 4 rate the stock a Hold and 1 recommends Sell. With a return potential of 226.5%, the stock’s consensus target price stands at $62.88.