Why Intercept Pharmaceuticals Will Likely Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biopharmaceutical company Intercept Pharmaceuticals (NASDAQ: ICPT  ) has received an alarming one-star ranking.

With that in mind, let's take a closer look at Intercept and see what CAPS investors are saying about the stock right now.

Intercept facts

Headquarters (founded)

New York (2002)

Market Cap

$645.5 million

Industry

Biotechnology

Trailing-12-Month Revenue

$2.1 million

Management

Founder/CEO Mark Pruzanski
CFO Barbara Duncan

Trailing-12-Month Return on Capital

(48%)

Cash/Debt

$104.2 million / $0

Competitors

AstraZeneca
Salix Pharmaceuticals

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 67% of the 18 members who have rated Intercept believe the stock will underperform the S&P 500 going forward.

Earlier today, one of those Fools, All-Star zzlangerhans, tapped the stock's recent surge as particularly unsustainable:

Intercept's share price jumped from [$33] to [$38] ... apparently because the company was able to price their follow on offering at the market value of [$33]. I've seen stocks rise before after announcing dilution would come at market value, the mirror image of the plunge seen when the new shares are sold below market. The [S]treet interprets this as a vote of confidence by the book runners and their clients who will be buying the new shares. ...

Regardless of the pricing of the secondary, Intercept seems overvalued to me at these levels for reasons I've described previously. Intercept is developing obeticholic acid as a second-line therapy in primary biliary sclerosis for patients who have failed treatment with the standard of care ursodiol. There's no SPA for the trial, the trial endpoints do not seem to me to be rock solid, and topline data isn't expected until Q2 2014 at the earliest. There's no reason for the stock to be so volatile a year ahead of the next significant catalyst except for the desire of traders to use it as a football.

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Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 20, 2013, at 9:10 PM, panamakid wrote:

    With all this foolery and 1 star rating and guarantees from the fools that this stock will tank, why does Oppenheimer come out with an OUTPERFORM rating and a $60 price target? Are U guys just FOOLING around or do U know what UR talking about. How come ICPT has been up in the face of the last 2 days of market tanks? Just luck, I guess.

  • Report this Comment On June 20, 2013, at 9:53 PM, panamakid wrote:

    Hilary Joe Cramer, Chief Market Strategist, GameChangerStocks.com just loves ICPT. "Could double their $550M market cap and has killer liver disease drug OCA." I guess I must be the FOOL.

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