What happened
The market wasn't in the mood to test MacroGenics (MGNX -3.27%) as an investment on Friday. The clinical-stage biotech's share price fell by almost 5%, a movement influenced greatly by an analyst's recommendation downgrade, mixed with a dash of profit-taking. By contrast, the S&P 500 index dipped by a little over 1% that day.
So what
Before market open, Guggenheim prognosticator Charles Zhu changed his recommendation on MacroGenics stock. He now has it tagged as a neutral; previously he felt it was a buy.
Zhu's reasoning behind the downgrade wasn't immediately available. However, it came very quickly on the heels of MacroGenics' latest annual earnings report, which many investors took positively. There was quite a bit to like in the numbers, particularly the near-doubling of revenue over the 2021 tally, and a net loss that was considerably narrower than its predecessor's.
This blasted the stock's price well higher on Thursday, so it's likely certain investors booked quick profits the following day. This post-earnings, profit-taking dynamic typically drives a stock's price down, particularly for small-cap titles. Like many biotech companies, MacroGenics falls into this category, with a market cap slightly over $411 million.
Now what
MacroGenics has the advantage of concentrating in a hot segment, as it specializes in developing monoclonal antibody therapeutics aimed at attacking cancer. And in contrast to most clinical-stage biotechs it has a revenue stream thanks to its antibody-based technology platforms.
So while Thursday's share-price blast might be an overreaction, Friday's sell-off feels unwarranted. Investors might well consider buying this promising company on the dip.
