Why XOMA Corp. Shares Slumped

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of XOMA  (NASDAQ: XOMA  ) sank 6% today after MLV & Co. downgraded the biotechnology company from buy to hold.

So what: Along with the downgrade, analyst Graig Suvannavejh lowered his price target to $7 (from $8), representing about 9% worth of upside to yesterday's close. So, while contrarians might be attracted to the stock's weakness of late (it plunged 28% last week on negative phase 2 data associated with gevokizumab's prospects in erosive osteoarthritis), Suvannavejh's call suggests ever-increasing skepticism on Wall Street over the drug's sales potential.

Now what: According to MLV, XOMA's risk/reward trade-off is pretty balanced at this point.

"Simply put, gevo's miss was big, especially given the rev opp'y we saw in EOA ($1B). While advancing gevo into P3 for pyoderma gangrenosum (PG, ultra orphan) has more appeal than going into severe acne, even with higher projected sales ($335M vs. prior $90M), gevo in PG just doesn't pack the same punch revenue-wise as gevo in EOA," said Suvannavejh. "Thus, while also finding the stock fully valued at current levels, we'd like to see more concrete progress with gevo before regaining full confidence in XOMA again."

Of course, when you couple gevo's still-available opportunities in other indications with the stock's big pullback, biotech-savvy value hunters might want to take a closer look.

More reliable ways to wealth
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

Read/Post Comments (0) | Recommend This Article (0)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2872852, ~/Articles/ArticleHandler.aspx, 8/31/2015 9:52:07 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

Today's Market

updated 36 minutes ago Sponsored by:
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASD 4,776.51 -51.82 -1.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/31/2015 3:59 PM
XOMA $0.83 Down -0.03 -3.82%
XOMA Limited CAPS Rating: ***