You saw the headlines. You know your stock price made a big move. But what does that portend for your investment's future?
By pairing the latest news with the collective wisdom of our 180,000-strong Motley Fool CAPS investing community, we might be able to discover whether your stock's latest exploits are a short-term hiccup -- or the start of a much bigger trend.
These two stocks both made big moves over the past five trading days -- one up, one down:
CAPS Rating (out of 5)
Change Past Week
|AVI BioPharma (Nasdaq: AVII )
|Avon Products (NYSE: AVP )
Source: Motley Fool CAPS. Percentage change from March 20 to March 27.
72 inches down
It was a mixed bag for biotech AVI BioPharma, which saw its lead drug candidate meet its clinical-test primary endpoint of increasing dystrophin-containing muscle fibers, but the real goal was to help patients walk, and there etepliersen fell well short of the goal.
Yet there is still hope for the drug. Patients with Duchenne muscular dystrophy lack the protein dystrophin, and the phase 2b trials showed a statistically significant increase in the protein, at least in one group. A second one showed no such increase when compared with a placebo, but actual clinical measurements, such as a six-minute walking test, also failed to show a statistically superior outcome.
Investors have been plagued by these binary events recently, most recently when Keryx Biopharmaceuticals (Nasdaq: KERX ) plunged 60% after its colorectal-cancer treatment perifosine failed to achieve its goals. I've maintained that it's something of a crapshoot to bet on these either/or propositions, so I don't make a CAPScall on these stocks. Regardless of whether a drug comes through the clinical trials unscathed, it then needs to run the FDA gauntlet of approval. Chelsea Therapeutics (Nasdaq: CHTP ) surprised the market when an FDA panel recommended its drug Northera receive approval, only to get crushed when the regulatory agency rejected the recommendation. As investors are all too familiar with, the FDA can and does march to its own tune.
With the mixed results AVI showed, I'll stay away from making a call here as well, but the broader CAPS community is supportive, with 88% of those rating the biotech to outperform in the future. Tell us in the comments section below or on the AVI BioPharma CAPS page whether you think this setback will sink the company further, and then add the stock to your Watchlist to see whether it can walk back from the brink.
This time it was privately held Coty knocking on Avon Products' door that sent the beauty-products maker soaring.
The company is in need of an extreme makeover. Avon is under investigation by the SEC for possible bribery in China and improper disclosures to an analyst, and it recently fired its vice chairman, as it appears he was aware of the bribes for years. Coming as it did after chairwoman and CEO Andrea Jung announced she was giving up the CEO spot, you'd think Avon would be happy someone thought it was the belle of the ball. (Avon just announced that it hired a longtime Johnson & Johnson executive to fill the top spot.)
Coty offered Avon $10 billion -- $14 billion total when you include the debt from the two companies -- but the embattled beauty queen said it wasn't interested. While Coty says it's not interested in making a hostile bid for Avon, it would be willing to pay a little more if Avon would just negotiate. It hasn't been willing to so far, so Coty went public with its offer to put pressure on management.
With the run-up in value, Avon now sports a multiple in excess of rivals such as Revlon (NYSE: REV ) based on earnings estimates. Competitors don't have the taint of investigations clouding their immediate future, though. The bid by Coty would seem worthy of consideration, but for the apparent hubris. It seems CAPS member andrecrespo feels similarly, likening it to Yahoo!'s rejection of an offer from Microsoft.
I can't say I disagree, and I just closed out my outperform rating on CAPS. Add Avon to the Fool's free portfolio tracker and let us know in the comments section below whether you think the personal-products maker ought to take a look in the mirror and determine whether its fading beauty makes Coty's offer a chance to avoid becoming a spinster.
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