>What is it they say about the lunatics running the asylum?
It's not hard to imagine.
I don't believe there is justification for this price drop, but it is not difficult in this market to raise fears of missing earnings or "something"and there are a lot of shorts out there. And the company is in a quiet period. I am sure the earnings and the conference call will reassure a lot of investors.
This stock reminds me of Ascend Communications.
In November, there was an article in Fortune magazine titled "The Scariest Techstock Ever" which described Ascend's ascent and descend.
pathfinder.com
In November and December, analysts did not like Ascend, to put it mildly. Now in March and April, analysts' sentiments towards Ascend have shifted and almost all have been upgrading Ascend to Buys and Strong Buys. Even Cramer is now long Ascend. Two days ago asnd and agph were trading at the same price. Interesting that yesterday there was a sharp sell-off in Ascend's stock price from 38-39 down to 36, which was followed by a gain of +2 point gain in the last 20 minutes. Today Ascend finally broke through 40 and closed over 40, after many attempts. Ascend reports earnings tomorrow after the bell. It should be interesting.
And guess who just upgraded Ascend after the bell today: Montgomery Securities, one of the last to jump on the bandwagon.
I think that part of the weakness in Agouron's stock price may have been caused by Montgomery Securities lowering their estimates for Agouron's Fiscal 99 year to $1.02, from $1.59, on March 25. They kept their estimates the same for 3/98 and 6/98 the same. I have no other information and have no idea what they based this on. Except that their estimate stands out like a sore thumb and is widely divergent from all the other analysts' estimates.
For Fiscal Year, 6/98, there are 8 analysts who have a mean est. of .90, with the high/low of .90/.80 (a pretty narrow range)
For Fiscal Year 99, there are 6 analysts, and the mean estimate is $1.34, with the high/low of $1.65 and $1.02 respectively, a much wider range. Zacks must have taken it's cue from Montgomery because after this revision, they changed their recommendation, first to a 3 and then to a 4. I will be very curious to see how Montgomery revises estimates after earnings. And if Zacks changes their recommendations.
I don't know what these revisions were based on....maybe it included costs for the 2000 year conversion problem..
Montgomery Securities were the only analysts who downgraded Agouron after ICAAC, on the basis of the "Controversial Resistance issues raised by an anecdotal latebreaking study. These later became non-issues when data emerged that showed that Viracept does have a favorable profile as far as cross resistance, and evidence emerged that it was possible to switch from Viracept to a different protease inhibitor or combination of protease inhibitors, as long as the changes were made early, when the viral load was still low, and as long as the nukes were changed as well. Nonetheless, the Montgomery analyst used this information to downgrade the stock, as he was no longer able to project sales for the year 2001 and beyond....
Joe Kiernan commented at the time that "Morgan Stanley looked at the same data and did not come to the same conclusion as the Montgomery analysts." Message 2306306
It is a shame that the market is influenced by these upgrades and downgrades. There certainly has been enough criticism lately of some of the research and discussion of analysts' conflicts of interest.
If Morgan Stanley or PW or Lehman Brothers or Robertson Stephens (and some others) lowered their estimates, I might be concerned. But they haven't.
But Montgomery....the only analyst to change their recommendations based on data from an anecdotal study.... Then sometime after ICAAC, Montgomery changed back to a Buy and just recently changed back to a Hold..
What should we expect when Wall Street rewards companies who continue to disappoint but whose CEO's keep promising that "next quarter will be better" They seem to like these companies who "overpromise and underdeliver." (like Motorola and AMD) They obviously don't reward the opposite. And those internet stocks, with their sky high p/e's. There is more intense competition in those fields and a much higher probability of being replaced with new technologies in this rapidly evolving field.
Contrary to some, the protease inhibitor market is not declining. Sales are still increasing. We have all seen the prescription data over here.
Apparently, the recent Merck downgrade was partly due to a significant
drop in Crixivan sales.
FWIW, according to Zacks, there was one increase in a Strong Buy; One Increase and one Decrease in Moderate Buy; One increase and one Decrease in Hold, and One increase and one Decrease in Mod Sell (must be Zacks); and one decrease in Strong Sell
To change topics, as far as these new "concerns" over "how many people are on Viracept" I don't think we should adopt a new yardstick to measure Viracept's growth. i.e.. by looking at the number of people on Viracept. IMO, there are enough problems digesting the swings in the weekly and monthly prescription data without adding new worries by examining data which is not reliable, and which is difficult to estimate.
But since the issue was raised, according to an article in the WSJ on December 12, 1997, there were 60,000 people on Viracept. If the number is now 85,000 and was 30,000 in June, that is significant growth.
From that article on 12/6/97 in the WSJ:
>Since winning Food and Drug Administration approval in March, Agouron's >Viracept has been adopted by some 60,000 patients. >Analyst Edmund Debler of Mehta and Isaly in New York is bullish on both >Agouron and Vertex, largely because he expects the market for AIDS drugs to >grow to $5 billion by 2000. >If that happens, he thinks Viracept could eventually bring in $1 billion a year for >Agouron and other companies that market the drug overseas..,. Message 2900423
Another factor causing these price swings may be day traders who have set their stop prices, and who sell if this stop is triggered, and the more there are, the greater the sell off. For some who trade by TA, the fundamentals don't matter.
The fundamentals of this company haven't changed and have only improved.
There were people on this thread who posted a year ago that Agouron would never be profitable. Wrong. There are some who panic every time another drug in development is mentioned. Yes one day there probably will be probably be different drugs to treat AIDS, but none of these new approaches such as those involving chemokines or chemokine co-receptors, immunotherapy, T-cell therapy or prevent fusion of the HIV virus or vaccines will be ready for several years, and that is if the clinical trials are successful. And they may or may not be used in addition to the present drugs.
Agouron is doing what they can to dispel this "One drug company image" which is hurting Agouron. They are devoting the same energy towards AG3340 as they did towards Viracept that allowed them to receive FDA approval in record time. They are hoping to apply for an NDA in FY1999 to 2000 for AG3340. And they should be releasing the results of the Phase I and announce the beginning of Phase II/IIII trials for AG3340 this quarter, or very soon. agouron.com
FWIW, the headlines in WSJ's 'Heard on the Street' on October 28, 1997, the day after the 500+ drop, were:
"Not Even the Bulls See a Fast Recovery"
So much for the experts. Five months later, the market is up 1700 points.
But I do hope there are not anymore 'buying opportunities' either.
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