Take Two Doses in the Morning and Feel Better (QCOR)

Investors in Questcor (NASDAQ: QCOR) received a double dose of positive news this morning that helped bring a little color to what has been a dreary autumn. First, the company reported positive sales data for its H.P. Achtar Gel (Achtar), an injectable drug approved by the FDA for the treatment of 19 indications. Questcor, however, derives its revenues from the treatment associated with multiple sclerosis, nephrotic syndrome and infantile spasms in children under the age of two. A previous story on the stock authored by Prop Think, an investment service offering trading ideas, speculated that prescriptions for Questcor’s primary revenue generating product had been cut in half. According to a company spokesperson, patients continue to have access to Achtar through government programs and private insurance plans. In an 8-K filing, the company reported a year-over-year increase of 66% in paid prescriptions and a 16% increases from the second quarter to the third.

The second piece of good news came in the form of an analyst upgrade from Jefferies Group. The investment firm changed its rating on the stock to a “buy” from “hold”. In addition, Jefferies increased its price target on Questcor share prices from $24.00 to $28.00. Ironically, just a little over two weeks ago, Jefferies had cut its rating on the stock from a “buy” to a “hold” plus cutting the price target in half. In a note on September 20, the analyst expressed concerns over a change in reimbursement policy by Aetna, which indicated the insurance company would only reimburse charges associated with infantile spasms.

Out of the 11 analysts with a rating on the stock, five give the stock a “buy” recommendation. The price target for the stock ranges from $28.00 to $52.00.

The Aetna news and subsequent downgrades of the stock by several investment analyst sent Questcor share prices plummeting. In one day, the stock fell almost 50% from $50.52 to $26.35. In the aftermath, shares continued to come under pressure until they hit an annual low on September 27 when the stock traded for $17.25.

Buyers wasted little time snatching shares this morning. On the opening bell, the stock gapped $1.53 higher than yesterday’s closing price to begin the session at $21.82. Within a few minutes of the opening, the stock climbed to an intraday high of $22.48. By the time lunch arrived on the east coast, shares had given up a chunk of the day’s gains. Shares traded as low as $20.42 on the day. Questcor stock finished the day with a gain of over 3% to end the trading session up 67 cents at $20.96. Over nine million shares exchanged hands during the day, which slightly out paced the number traded on an average day. Traders will have to decide whether today’s gap opening coupled with a positive close signals better days for the stock.

Since the beginning of July, share prices have swung from an annual high of $58.91 to a recent 12-month low at $17.25. The last few weeks have seen some of the heaviest volumes in Questcor shares.

Questcor Pharmaceuticals is classified as a biopharmaceutical company. The company’s main drug (Achtar) has been approved for 19 different medical indications.

 

 

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).