Why Achillion Pharmaceuticals Inc. Shares Soured

Achillion receives a boost from Wall Street but its main engines fail to fire. Find out what investors should really be watching through all of this smoke.

Jun 11, 2014 at 1:38PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Achillion Pharmaceuticals (NASDAQ:ACHN), a clinical-stage biopharmaceutical company aimed at developing therapies to treat hepatitis C, gained as much as 6% following an upgrade from R.W. Baird, but ultimately gave up those gains and sank as much as 12%.

So what: Before the opening bell this morning, R.W. Baird upgraded Achillion from neutral to outperform while boosting its price target on the company from $4 per share to $12. Based on yesterday's closing price this would imply up to 54% upside potential to Achillion's share price. The upgrade also follows an announcement from Achillion yesterday that its lead clinical compound, sovaprevir, had been removed from clinical hold by the Food and Drug Administration, and that it was cleared to begin once-daily dosing at 200 mg once again.

Now what: Normally I suggest that investors ignore analyst ratings as they usually have a very short-term effect on a company's share price and often have little bearing on our long-term investing thesis. R.W. Baird has provided the perfect case in point why this is a good idea given that Achillion shares nearly tripled this week, and only following this move does Baird boost shares to an outperform. Need more evidence? Following Idenix Pharmaceuticals 229% spike higher on Monday after Merck agreed to buy the company Baird also upgraded it to outperform. These are two great examples of why you alone are accountable for your own investments and why you shouldn't put much credence in Wall Street's ratings of your holdings.

What investors should really be focused on is the development of sovaprevir now that it's off clinical hold. Achillion has had a difficult time trying to advance its investigational drugs beyond midstage trials, and until such time as this does happen it's probably not in investors' best interest to speculate in this highly volatile and wholly clinical-stage stock.

Achillion nearly tripled this week, and that still may not be enough to keep pace with the potential of this top stock over the long termThe best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need to Motley Fool’s new free report on the dream-team responsible for this game-changing blockbuster, CLICK HERE NOW.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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