Please ensure Javascript is enabled for purposes of website accessibility

Why Amarin Stock Plunged in February

By George Budwell - Mar 6, 2020 at 9:00AM

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

Amarin's stock was hammered last month for two reasons.

What happened

Shares of mid-cap drugmaker Amarin (AMRN 2.56%) fell by 20.9% in February, according to data from S&P Global Market Intelligence.

The Irish biopharma hit the skids last month for two reasons.

First, investors apparently weren't entirely enthused with Amarin's fourth-quarter results released on Feb. 25. Even though the company beat Wall Street's consensus revenue figure for the three-month period by a healthy 4%, Amarin's shareholders were hoping to get an updated annual guidance to the upside. Unfortunately, the company simply maintained its 2020 annual guidance when it reported fourth-quarter results, calling for net total revenue of between $650 million to $700 million for the full year. 

Second, the COVID-19 illness also weighed on the drugmaker's shares toward the back end of February. Amarin's stock has been trading at a fairly rich premium ever since Vascepa's positive cardiovascular outcomes trial. Nearly every stock with a stretched valuation -- based on classic valuation metrics -- took a big step backward last month, however. Amarin was no exception in this regard.    

A blackboard with a chart showing a down arrow in white chalk.

Image source: Getty Images.

So what

Amarin's shares are now down by a whopping 36% from their 52-week high. That's an interesting turn of events given that nothing has fundamentally changed about the company's long-term value proposition. While a buyout doesn't seem likely in the short term, Vascepa is on track to quickly become a blockbuster product. What's more, it no longer has any significant competitive threats on the horizon. Vascepa, in turn, is poised to become a critical component of the treatment landscape for patients at risk of cardiovascular disease despite being on statin therapy. 

Now what

Can Amarin's shares rebound this year? If you're looking for a quick profit, Amarin probably isn't your best bet. This biopharma stock has transitioned into "prove it" mode following Vascepa's label expansion. If things go according to plan, however, this stock should turn out to be a bargain at current levels. 

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

Amarin Corporation plc Stock Quote
Amarin Corporation plc
$1.60 (2.56%) $0.04

*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 07/07/2022.

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.