Acorda Therapeutics Inc (ACOR) and Finish Line Inc (FINL) Fell Off a Cliff; Analysts Look for Survivors

Can These Biotech Stocks Recover from an FDA Setback and a Stark 2Q Preliminary Earnings Stumble?


Acorda’s Approval Roadblock “Probably Not Fatal”: Cantor

Acorda Therapeutics Inc (NASDAQ:ACOR) shares are dropping like a hot potato down 25% to the market floor after the biotech firm revealed it was hit with refusal to file (RTF) letter from the FDA concerning the New Drug Application (NDA) for Inbrija (CVT-301). The road to approval for the investigational, inhaled levodopa (L-dopa) Parkinson’s therapy candidate looks like it just got stretched out, and investors are beside themselves in distraught unease.

Cantor analyst William Tanner acknowledges that while the “RTF [is] probably not fatal,” it is also quite bluntly “not a good look either” for Acorda. “We wonder whether investors who bought ACOR stock after largest shareholder Scopia Capital submitted a letter recommending a sale of the company would be inclined to sell on today’s news,” contemplates the analyst, seated on the firm’s prospects from the sidelines.

While Wall Street is turning upside down in the wake of the RTF suddenly on the table, blocking the pathway to the firm securing a green light for CVT-301, the analyst reiterates a Neutral rating on shares of ACOR with an $18 price target, which represents a 6% decrease from where the stock is currently trading. (To watch Tanner’s track record, click here)

However, “We believe ACOR stock could begin to recover as the CVT-301 approval timeline becomes known,” contends Tanner, who sees a chance for Acorda’s troubled fate today to reverse. In the end, the analyst does not believe the firm faces any real rise in liability when it comes to gaining approval from the agency on the heels of the RTF letter.

That elusive green light matters- but as Tanner wisely point out, so will sales, and he anticipates should Acorda manage to clear its hurdles out of the way, management’s forecast of $500 million peak revenue could tower loftily, too steep for the firm to reach. To the analyst, this is a looming concern in the long-term, and one that keeps him veering to a standpoint of apprehension on Acorda.

Where does the rest of the Street side on this volatile biotech player? It appears mostly bullish, as TipRanks analytics demonstrate ACOR as a Buy. Out of 6 analysts polled by TipRanks in the last 3 months, 2 are bullish on Acorda Therapeutics stock while 4 remain sidelined. With a return potential of nearly 56%, the stock’s consensus target price stands at $29.67.

Finish Line Stirs the Pot with a Bad 2Q Preliminary Earnings Warning

Finish Line Inc (NASDAQ:FINL) shares are on a massive almost 20% trip after the footwear retailer kicked investor’s expectations to the curb with a sharply disappointing preliminary second quarter report for the year- including management’s slash at the company’s full-year comparable sales guide.

Clearly, the Street is far more shocked, and not at all awed by what seems to be Finish Line sounding its own alarm in a cautionary alert, and FBR analyst Susan Anderson sees fit to take a sharp step back from her former bullish stance right to the sidelines.

In reaction to the shortcomings of the print, the analyst downgrades from a Buy to a Neutral rating on Finish Line stock while dragging the price target down from $22 to $9, which implies a close to 8% increase from current levels. (To watch Anderson’s track record, click here)

For the second quarter, Finish Line has posted preliminary EPS of $0.08 to $0.12, a disappointment considering the analyst was calling for $0.36 and consensus was seeking $0.37. The retailer’s comps of -4.6% also proved to rock the boat negatively, with the analyst and consensus having expected just -1.5% and management’s outlook initially projecting -LSD. Net sales dipped down 3.3% year-over-year to $469.4 million and inventory is anticipated to wind down 7% to 8% year-over-year. “While it is no surprise FINL’s results are pressured given FL’s recent guide down, the magnitude is much greater than we would have expected,” explains Anderson.

The company’s updated third quarter guide likewise reveals holes, now forecasting -$0.32 to -$0.40, quite underwhelming up against the analyst’s expectations of -$0.20 and consensus of -$0.25. Fourth-quarter updated outlook of $0.50 to $0.58 is another underclass for Finish Line, with the analyst and consensus predicting $0.75. Full year 2018 guidance of $0.50 to $0.60 has also surely been a peg in the stock’s downfall today, as Anderson estimated $1.14 and consensus set the bar at $1.10. Full year comps are now anticipated to fall between -3% and -5%, a far cry from the analyst’s forecast of +2.5%, consensus of +0.9%, and the previous guide of +LSD.

In the aftermath of Finish Line’s gaping preliminary earnings tumble, the analyst is taking her second-quarter EPS from $0.36 to $0.11, full-year 2018 EPS from $1.14 to $0.55, and full-year 2019 EPS from $1.44 to $0.60.

Anderson concludes that “Given the headwinds facing the industry, potential for a slowing athletic footwear cycle, and outlook for a continued promotional environment […]” she has become cautious on the future of Finish Line, elaborating, “Management indicated that the significant EPS miss was driven by the difficult promotional environment and resulting sales/margin pressures, which they expect to continue for the rest of fiscal 2018. […] While this was not a significant surprise given FL’s EPS guide down, this is a greater cut than expected to EPS and it appears there could be a weakening athletic cycle ahead. FINL also announced the adoption of a shareholder rights plan to protect the company against any unwanted takeover bids (note Sports Direct has cumulated an 8% direct position and 28% total direct/ indirect stake).”

Most of Wall Street echoes a neutral point of view, with TipRanks analytics exhibiting FINL as a Hold. Based on 8 analysts polled by TipRanks in the last 3 months, 1 rates a Buy on Finish Line stock, 6 maintain a Hold, while 1 issues a Sell on the stock. The 12-month average price target stands at $10.25, marking a nearly 24% upside from where the stock is currently trading.

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