Analysts are weighing in on renewable energy company Sunedison Inc (NYSE:SUNE) and US biotech company Tetralogic Pharmaceuticals Corp (NASDAQ:TLOG), as shares of both companies fell sharply today. The analysts reflect on Sunedison’s new debt exchange and Tetralogic’s negative clinical trial results.
Sunedison shares plunged nearly 37% today after the company announced issuance of $725 million second lien secured term loan and a series of exchange transactions.
RBC Capital analyst Mahesh Sanganeria believes that all the transactions demonstrate progress in improving the company’s liquidity position and deleveraging balance sheet.
Sanganeria noted, “We like the transaction as it effectively provides SunEdison $550M additional liquidity. While the LIBOR+10% interest appears high for the new loan, it is lower than the effective interest rate of the current $170M second lien term loan.” Furthermore, “While the effective interest rate is increasing, the net debt outstanding is reduced by ~$110M (or 33%) after the transaction. It serves the purpose of balance sheet deleverage.” Finally, “Shares are issued at significant premium to SUNE’s current stock price. The common stock issuance effectively deleverages SUNE balance sheet and reduces interest payment.”
The analyst reiterated an Outperform rating on shares of SunEdison, with a price target of $20, which implies an upside of 411.5% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mahesh Sanganeria has a yearly average return of 2.3% and a 57.4% success rate. Sanganeria has a 1.3% average return when recommending SUNE, and is ranked #1197 out of 3630 analysts.
Out of the 16 analysts polled by TipRanks, 11 rate SunEdison stock a Buy, 3 rate the stock a Hold and 2 recommend a Sell. With a return potential of 259%, the stock’s consensus target price stands at $14.04.
Tetralogic Pharmaceuticals Corp
Tetralogic Pharmaceuticals shares crashed 75% after the company announced the anticipated data from two Phase II studies with overall negative results, making it the top loser today.
In reaction, Roth Capital analyst Joseph Pantginis slashed the price target for the stock to $1.00 (from $5.00), while keeping the rating at Buy.
Pantginis noted, “The results from the MDS study are disappointing. Management has indicated that they will be enacting a restructuring, which will extend the cash runway two quarters into 4Q16.”
“While the path forward for birinapant is unclear, we believe the SHAPE program’s inherent value can provide a longer term opportunity for the company pending the consummation of a potential partnership,” the analyst added.
According to TipRanks.com, analyst Joseph Pantginis has a yearly average return of -7.3% and a 34.6% success rate. Pantginis has a -1.7% average return when recommending TLOG, and is ranked #3586 out of 3630 analysts.