What happened
Shares of Silk Road Medical (SILK 0.85%) were down more than 50% as of 11 a.m. ET on Wednesday. Erica Rogers, the company's CEO for the past 11 years, is stepping down and the company released preliminary third-quarter numbers. So far this year, the healthcare stock is down more than 86%.
So what
Silk Road is a medical device company that focuses on therapies to reduce the risk of stroke. On Tuesday, after the markets closed, Rogers announced she was retiring and the uncertainty left by her departure was enough to send the stock lower. Combine that with lower-than-expected preliminary third-quarter numbers and lowered guidance, at least at the top end, and some investors rushed to the exits.
It's important to note that not all of the preliminary third-quarter numbers were negative. The company reported expected revenue of $44.4 million in the quarter, up 19% year over year. It also said that it expected yearly revenue to be between $170 million and $174 million, representing growth of between 23% and 26% over 2022. However, the quarterly revenue was a drop from the $45.3 million reported in the second quarter and earlier projections of yearly revenue to be between $180 million and $184 million.
Now what
Four analysts downgraded the stock on Tuesday because of the news. The most critical was Citigroup, which downgraded its Silk Road position from buy to sell and dropped its price target from $32 to $8. CL King and B. Riley both changed their positions on the company from buy to neutral and Stifel Nicolaus moved its position on the stock from buy to hold and dropped its price target from $45 to $12.
The big move downward might easily be reversed. While the company isn't profitable, it is still growing revenue and even the most negative of price targets for the stock from analysts are above what it was trading at on Wednesday.
