Why Did Mizuho Securities Downgrade Achaogen’s Stock?

Mizuho Securities analyst Difei Yang downgraded Achaogen (AKAO) to Hold today and set a price target of $3. The company’s shares closed yesterday at $2.65, close to its 52-week low of $2.10.

Yang noted:

“We see two most likely scenarios for the company including; 1) a potential sale or merger, or 2) Achaogen could potentially run out of cash in early 2019. We downgrade to Neutral and reduce our PT from $8 to $3. Our price target was determined using a weighted average scenario analysis (more below).”

According to TipRanks.com, Yang is a 5-star analyst with an average return of 19.7% and a 48.3% success rate. Yang covers the Healthcare sector, focusing on stocks such as Alder Biopharmaceuticals, Audentes Therapeutics, and Revance Therapeutics.

Achaogen has an analyst consensus of Moderate Buy, with a price target consensus of $10.

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Based on Achaogen’s latest earnings release for the quarter ending June 30, the company reported a quarterly GAAP net loss of $49.97 million. In comparison, last year the company had a GAAP net loss of $29.91 million.

Based on the recent corporate insider activity of 37 insiders, corporate insider sentiment is negative on the stock.

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Achaogen, Inc. is a biopharmaceutical company, which engages in the research, development, and commercialization of antibacterial treatments for multi-drug resistant (MDR) gram-negative infections. It offers Plazomicin to treat bacterial illness, such as complicated urinary tract infection, blood stream infections, and other infections due to MDR Enterobacteriaceae. The company was founded by Nathaniel E. David in June 2002 and is headquartered in South San Francisco, CA.