Why Akorn Stock Crashed Yesterday



Akorn stock movement

Akorn stock (AKRX) fell dramatically from $12.98 on September 28 to $5.36 on October 1 after the Delaware Court of Chancery ruled against the company and in favor of Fresenius. The ruling permits Fresenius to terminate the $4.8 billion merger agreement with Akorn. Fresenius has cited data integrity issues in regards to Akorn’s operations as one of the main reasons for the termination of the deal in its press release. Yesterday’s ruling seems to validate those concerns and has thus negatively affected the overall investor sentiment for Akorn. Akorn’s closing share price on October 1 was the lowest the stock has ever reached in the last five years.

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Analysts’ recommendations for Akorn

The 12-month consensus analyst recommendation for Akorn on October 2 is a “hold.” The 12-month consensus target price for the company is $27.25, which is 408.4% higher than its last closing price on October 1. The highest target price estimate for the company is $34, and the lowest target price estimate is $14. Of the eight analysts covering Akorn in October 2018, all eight analysts have recommended the company as a “hold.”

Revenue and earnings estimates

Wall Street analysts expect Akorn to report revenues of $749.03 million in fiscal 2018, which is a year-over-year (or YoY) drop of 10.94%. The company is also expected to witness adjusted diluted earnings per share (or EPS) of $0.50, which would be a YoY decline of 57.84%.

Analysts expect an almost flat revenue performance for Akorn in fiscal 2019 and fiscal 2020. The company is expected to report revenues of $752.56 million and $753.69 million in fiscal 2019 and 2020, respectively. Wall Street analysts have also projected adjusted diluted EPS of the company to be $0.47 and $0.45 in fiscal 2019 and fiscal 2020, respectively.


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