U.S. stocks traded mostly lower on Thursday as government bonds slipped and oil traded below $50 a barrel for the first time since June. Among the equities in focus are Twitter Inc (NYSE:TWTR) and The Medicines Company (NASDAQ:MDCO). Let’s take a closer look:
Twitter shares are falling nearly 20% as of this writing, following a concerning report that Walt Disney and Alphabet won’t submit bids for the social media platform.
Subsequently, SunTrust Robinson analyst Robert Peck reiterated a Neutral rating on shares of Twitter with a price target of $18, which reflects a potential downside of 9% from last closing price.
Peck commented, “As we have pointed out before, we think that if Twitter’s currently challenging trends continue, then M&A is inevitable for Twitter. However, we think the CEO would like to see whether many of his recent initiatives can work in turning around Twitter user & engagement growth before seeking strategic alternatives (and many like NFL, DoubleClick and Live occur in 4Q). With that said, it’s important to see what bid levels could look like. If we apply the LinkedIn initial offer premium of 17x EBITDA, we think a take-out price could reach $20. If a potential sale becomes a competitive process (like LinkedIn’s process became), then the higher multiple of 21x could drive targets closer to $24.”
“However, we underscore that it’s possible that no bids materialize (i.e. a “busted process”) or that bids are lower than the current stock price ( a “take under”) – this could bring the stock back to its 52 week lows (~$14-15), right before when the LinkedIn acquisition that sparked general M&A anticipation. Hence the risk reward is still not favorable for Twitter, in our view,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Robert Peck has a yearly average return of 8.9% and a 66% success rate. Peck has an 18% average return when recommending TWTR, and is ranked #162 out of 4190 analysts.
Out of the 42 analysts polled by TipRanks, 6 rate Twitter stock a Buy, 25 rate the stock a Hold and 11 recommend a Sell. With a downside potential of 10%, the stock’s consensus target price stands at $17.81.
The Medicines Company
The Medicines Company saw it shares falling nearly 10% in response to the announced trial discontinuation of phase III RNAi therapy, revusiran, from Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) in TTR familial amyloid cardiomyopathy. As a reminder, The Medicines Company is currently using Alnylam’s RNAi technology in its PCSK9si program.
However, Jefferies analyst Biren Amin believes that ALNY setback has no read-through to MDCO’s PCSK9. As such, the analyst reiterated a Buy rating on the stock, with a price target of $43, which represents a potential upside of 27% from where the stock is currently trading.
Amin commented, “ALNY announced that revusiran was stopped due to lack of a treatment benefit w/ an imbalance of deaths favoring the revusiran arm over placebo. The imbalance was not tx-related. As a result of ALNY’s update, MDCO provided a safety update on ALN-PCSsc in which it reported no imbalances to date on peripheral neuropathy, liver toxicity, renal toxicity, and mortality from its 501- patient ORION-1 study. Data from this trial are expected at AHA on Nov 15.”
“As of Aug 26, 2016, MDCO’s Data Monitoring Committee for ALN-PCSsc’ ORION-1 PII study in 501 patients with high CV risk and elevated LDL levels, observed no safety imbalances and made the recommendation to continue the study. MDCO analyzed blinded safety data as of Sept 29 and continued to see no material issues. Mgmt specifically highlighted that in this blinded review there was no drug-related neuropathy (as observed with revusiran), no elevation of liver enzymes, and no changes in renal function with ALN-PCSsc. The company evaluated renal tox b/c first gen oligonucleotides have been observed to accumulate in kidneys potentially resulting in IgA nephropathy,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Biren Amin has a yearly average return of 8.5% and a 53% success rate. Amin has an 6.6% average return when recommending MDCO, and is ranked #359 out of 4190 analysts.
Out of the 9 analysts polled by TipRanks, 7 rate The Medicines stock a Buy, while 2 rate the stock a Hold. With a return potential of 46%, the stock’s consensus target price stands at $49.50.