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 Aegerion Pharmaceuticals (NASDAQ: AEGR) lost nearly 40% of their value today after the company reported underwhelming third-quarter earnings and provided weak forward guidance after the closing bell on Thursday.
So what: Aegerion's sole approved product, cholesterol-lowering drug Juxtapid, saw $43.7 million in sales during the third quarter, resulting in adjusted earnings of $0.12 per share but a loss of $0.20 per share on a GAAP basis. Analysts had expected $49 million in sales and a loss of $0.14 per share -- these expectations did not include the adjustments Aegerion used in calculating its non-GAAP earnings.
Looking ahead, Aegerion has cut its full-year sales projections for Juxtapid (and thus for total company revenue) from a range of $180 million to $200 million to a much lower range of $150 million to $160 million. This should result in an adjusted operating profit in the $15 million range and a GAAP operating loss of roughly $15 million. The company also expects revenue to rise in the range of 30% to 40% next year over 2014's full-year guidance range, which should result in a top line that ranges from $195 million to $224 million. Analysts had expected $172.9 million in revenue this year and $291.8 million next year, so this was an ugly, ugly guidance flop for Aegerion.
Now what: Yesterday's disappointment prompted Jeffries analysts to slash their price target from $61 all the way to $24, while downgrading Aegerion's stock from a Buy to a Hold, citing "little room for optimism" after reviewing the company's weak guidance. Deutsche Bank also downgraded Aegerion to Hold and questioned management's ability to execute its strategy. Between this flop and Aegerion CEO Marc Beer's recent sex-and-drugs scandal involving a Jeffries investment banker (hopefully the firewall held firm between that side and the analysts who just downgraded the stock), it seems like caution and skepticism are smarter attitudes to hold for the time being.