Why King Digital Entertainment, Intermune, and Pharmacyclics Jumped Today

This morning, it looked as though Monday would be a horrible day for the stock market, as worries about the health of China's economic growth and ongoing turmoil in Ukraine combined to send stocks falling at the open. Slowly but surely, though, stocks clawed their way back to small gains, and King Digital Entertainment (NYSE: KING  ) , Intermune (NASDAQ: ITMN  ) , and Pharmacyclics (NASDAQ: PCYC  ) had some impressive moves higher in their share prices today.


Source: King Digital Entertainment.

King Digital Entertainment gained 8.5% after the maker of Candy Crush Saga got favorable ratings from several analyst firms. The firms pointed to the King Digital's potential to continue monetizing Candy Crush Saga and the company's other game offerings well into the future, with King Digital well-poised to keep profiting as mobile devices get more common not just in the U.S. but worldwide. The analysts' arguments attempt to counter the market's perception that King Digital is too dependent on its primary game, raising fears that it will flare out like other mobile-gaming companies before it. It's important to remember, though, that among the analysts making positive assessments on the stock were the lead underwriters on King Digital's IPO, and while the recommendations are supposed to be independent of the underwriting relationship, you'll want to draw your own conclusions about how much weight you give them.

Intermune rose 7%, adding to its 2% rise on Friday after the biopharmaceutical company impressed investors with its first-quarter earnings report. Intermune's losses were slightly larger than in the year-ago quarter, but sales of the company's idiopathic pulmonary fibrosis treatment Esbriet almost tripled from last year and rose 18% sequentially from the previous quarter. Although Esbriet is available in Europe, Intermune plans to resubmit an application for approval from the Food and Drug Administration in the U.S. after mid-year. If the FDA approves the drug, then Esbriet could launch as early as next spring. Although widening losses are always troubling, the fact that Intermune has demonstrated success with Esbriet is a positive sign for its future.

Pharmacyclics climbed 8%, regaining every bit of the ground it lost last Friday after its own earnings report failed to inspire the same confidence that Intermune's did. The maker of mantle-cell lymphoma treatment Imbruvica saw total sales soar as a result of the drug's approval and milestone payments associated with its success, turning a year-ago loss into a substantial profit. On Friday, investors seemed disappointed by Pharmacyclics' revenue guidance for the full year, which fell far short of what analysts were expecting. But given the demand for promising treatments, investors might well have decided Monday that Pharmacyclics has potential not just in its own right as an independent company but also as a possible takeover candidate.

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