Questcor (Nasdaq: QCOR) shares took a dip during Friday's trading. What happened to cause the plunge? Here are the two suspects.
- Analyst ambivalence
Analysts with Japanese investment bank Mizuho initiated coverage on Questcor with a rating of "neutral." Their price target for the stock is $28 per share. That's exactly $0.17 lower than Questcor's closing mark on Thursday.
Mizuho's rating matches that of Piper Jeffray, which maintained its neutral rating in early November. However, Mizuho stands out from the pack with its low price target. Piper Jaffray's target price is $45 per share, even with the firm's neutral rating. Most other analysts have "buy" or "outperform" ratings for Questcor, with an average target of $40.50 per share. Lazard is most bullish with a target price of $74 per share.
Which of the analysts is guessing more accurately? There's no way to be sure yet, but as of now the market could be giving more credence to the ones from the Land of the Rising Sun.
- Insurer inertia
The other possible reason for Questcor's dip is the update from Aetna released on Thursday. The large insurance company reaffirmed its prior decision to limit coverage of Questcor's H.P. Acthar gel to infantile spasms.
Some were hoping that Aetna might back off its earlier decision after UnitedHealth Group and Humana chose not to pursue such stringent limitations. However, nothing has really changed over the past few months to convince Aetna of Acthar's efficacy for treating multiple sclerosis and nephrotic syndrome.
Basically, we have two neutral decisions. Mizuho initiated coverage at neutral. Aetna's no-change update results in a neutral impact on shipments of Acthar. What will it take for Questcor to shift into gear? The best way to prove that the more optimistic analysts are right is to continue growing sales of Acthar. Questcor's beefed-up sales force is the key to making that happen.
At the time of publication, Keith Speights and Brenton Flynn did not own shares of any companies mentioned in this report. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.