Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of hepatitis-C drug hopeful Idenix Pharmaceuticals (Nasdaq: IDIX) plunged as much as 12% earlier this morning following an analyst downgrade, but have since regained nearly all of their losses.

So what: Stifel Nicolaus slapped the dreaded sell rating on Idenix this morning, downgrading it from neutral. Idenix has rallied recently on speculation that it could be the next takeover target in the red-hot hepatitis-C research sector. Its rivals, Pharmasset and Inhibitex (Nasdaq: INHX), have already agreed to be acquired, and with news that Inhibitex had not one, but two companies offering to buy it for $2.5 billion, it's apparent that other bidders do still exist.

Now what: I've often described the hep-C sector as Tulipmania at its finest -- and I've also been completely wrong up to this point. Pharmasset's PSI-7977 had only cleared phase 2 clinical trials and Inihibtex's INX-189 is just beginning in phase 2 clinical trials, yet both commanded a huge pricing premium. Idenix currently has its drug midway through phase 2 trials as well, and speculators are betting the boat on a possible buyout. As for me, I think this sector is brutally unproven, and I've gone so far as to give Bristol-Myers Squibb (NYSE: BMY) the dunce cap of the week a couple of weeks ago for agreeing to pay $2.5 billion for Inhibitex -- a company that's years away from having a marketable drug. I'd rather take my chances and avoid Idenix here at all costs. This is a rare case in which I agree with an analyst's sell recommendation.

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