If You Own Intercept Stock, Should You Sell It Now?

On Monday, Intercept Pharmaceuticals (NASDAQ:ICPT) stock lost 39.7% and closed at $46.70 with a market cap of $1.54 billion. The stock fell after the FDA rejected Intercept’s drug for the fatty liver disease known as “NASH” (non-alcoholic steatohepatitis).

According to a Reuters report, “The FDA has sought additional post-interim analysis data from an ongoing late-stage trial in support of the marketing application as it found predicted effectiveness of the treatment failed to outweigh its potential risks.” The report also said, “The therapy, chemically known as obeticholic acid, is designed to improve fibrosis, or the build up of scar tissue in the liver caused by non-alcoholic steatohepatitis, a chronic disease related to obesity. Intercept said the FDA’s decision was premature and disagreed with the denial of approval based on the treatment’s effectiveness.”

Analysts downgraded Intercept stock

Many analysts downgraded Intercept Pharmaceuticals stock after the FDA’s report on Monday.

  • BMO downgraded the stock from “outperform” to “market perform” and decreased its target price from $107 to $52.
  • Cantor Fitzgerald downgraded the stock from “overweight” to “neutral” and decreased its target price from $186 to $57.
  • RBC downgraded the stock from “outperform” to “sector perform” and decreased its target price from $117 to $55.
  • Baird downgraded the stock from “outperform” to “neutral” and decreased its target price from $227 to $52.
  • Cowen and Company downgraded the stock from “outperform” to “market perform” and decreased its target price from $149 to $47.
  • Credit Suisse downgraded the stock from “outperform” to “neutral,” and decreased its target price from $137 to $59.
  • UBS downgraded the stock from “buy” to “neutral” and decreased its target price from $135 to $57.
  • Goldman Sachs downgraded the stock from “buy” to “neutral” and decreased its target price from $150 to $60.
  • Canaccord downgraded the stock from “buy” to “hold” and decreased its target price from $165 to $58.
  • Oppenheimer downgraded the stock from “outperform” to “perform” and decreased its target price from $124 to $46.
  • Wells Fargo downgraded the stock from “overweight” to “equal weight” and decreased its target price from $146 to $46.
  • Jefferies decreased its target price from $145 to $75.
  • Needham decreased its target price from $150 to $100.
  • SVB Leerink decreased its target price from $89 to $50.

Analysts’ consensus target price

Among the 23 analysts tracking Intercept stock, six recommend a “buy”—down from 18 in the last month. The remaining 17 analysts recommend a “hold”—up from four in the previous month. None of the analysts recommend a “sell.” Analysts have an average target price of $74.50 on Intercept stock. The target price implies a return of 59.5% based on the closing price of $46.70 on Monday. The consensus target price for the stock has fallen from $149.41 in May—a reduction of 50.1%.

Intercept’s growth projections

In the first quarter of 2020, Intercept delivered revenues of $72.65 million—an increase of 39% YoY (year-over-year). Wall Street analysts expected revenues of $69.66 million. The company reported an adjusted EPS of -$2.86 compared to -$3.03 in the same quarter previous year. The earnings beat analysts’ consensus expectation of -$2.90 per share.

Wall Street analysts expect Intercept to report an adjusted EPS of -$2.95 on sales of $72.01 million in the second quarter. Analysts also expect the company’s sales to rise by 14.5% YoY in 2020 to $288.66 million. The sales could rise by 28.3% YoY in 2021 to $370.36 million. The adjusted EPS will decrease from -$10.89 in 2019 to -$11.38 in 2020. Analysts also expect an adjusted EPS of -$8.58 in 2021.

Intercept’s stock returns

Currently, Intercept stock is trading 62.6% below its 52-week high of $125.00 and 4.9% above its 52-week low of $44.50. On a YTD (year-to-date) basis, the stock has fallen by 62.3% as of Monday.

Based on the closing price on Monday, Intercept stock was trading 39.0% below its 20-day moving average of $76.55. The stock is also trading 41.8% below its 50-day moving average of $80.20 and 40.7% below its 100-day moving average of $78.76. Intercept’s 14-day relative strength index number is 23, which indicates that it’s oversold.

Intercept stock has an upper Bollinger Band level of $90.95, while its middle Bollinger Band level is $76.55. On Monday, the stock closed near its lower Bollinger Band level of $62.15, which indicates that it’s oversold.

Intercept Pharmaceuticals stock rose 2.4% in pre-market trading at 8:01 AM ET today. At the same time, the S&P 500 futures fell 0.05%, while the Dow futures fell 0.07%. To learn more, read Rest of 2020 Might Be Volatile for the S&P 500.