Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Lexicon Pharmaceuticals Dropped as Much as 13.6% Today

By Maxx Chatsko - Feb 14, 2018 at 2:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The stock was downgraded by a prominent analyst.

What happened

Shares of Lexicon Pharmaceuticals (LXRX 4.30%) fell nearly 14% today after the company was downgraded by analysts at JP Morgan from neutral to underweight. The new price target is $10 per share, which is a 7% premium to yesterday's closing price. While this isn't ideal for shareholders, it's an unfortunate reality of owning shares in publicly traded companies.

As of 1:54 p.m. EST, the stock had settled to an 11.7% loss.

So what

Lexicon Pharmaceuticals has had a rough life on the stock market in the last five years. A healthy run-up that began in early 2015 has been almost entirely erased by a precipitous fall since mid-2017. Disappointing news from late-stage drug assets didn't help late last year. Meanwhile, the balance of the company's cash and cash equivalents changed by $150 million from the end of 2016 through the end of September 2017.

A man in a business suit holding his hand out while a stock chart showing losses hovers over it.

Image source: Getty Images.

While Lexicon Pharmaceuticals now has its first drug on the market, which generated $10 million in revenue in the first nine months of 2017, it also saw a roughly equivalent fall in collaboration revenue. The result? Sales were flat (slightly lower, actually) and operating losses hardly budged.

Now what

There's still high hope for the continued ramp up of sales of the first marketed drug, but there's also growing concern that another debt or share offering is on tap for 2018. Therefore, it's not entirely surprisingly that Wall Street is recalculating the value of Lexicon Pharmaceuticals stock.

Investors should wait for the next update from management in the coming weeks when it discusses full-year 2017 results and plans for the year ahead.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lexicon Pharmaceuticals, Inc. Stock Quote
Lexicon Pharmaceuticals, Inc.
$1.94 (4.30%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.