Pharma Stock Surges on Sale News
Daily Stock Market Primer
Despite positive geopolitical news over the weekend, markets are sagging this Monday. After opening the day up, all major indexes have been in retreat across the day’s trading. Microsoft (NASDAQ:MSFT) is among the mega-cap stocks leading the way down, while solid gains for McDonald’s (NYSE:MCD) are helping stem the negative trading.
We expect continued volatility as broadly strong earnings reports (we focused on earnings-news trading on the blog last week) continue to battle with bearish traders focused on rising interest rates. With more earnings news coming this week, US 10-year Treasuries closing in on 3%, and US inflation finally hitting the U.S. Federal Reserve’s 2% target, there’s good reason to expect the rollercoaster ride to continue.
Fortunately, news-based trading approaches backed by quantitative analytics historically perform even better in high-volatility environments. Volatile trading helps separate stocks being driven by actual news events from broader macro-market momentum. You can learn more about how investors are using News Quantified to get in on news-based trading profits (hedge funds have been milking these strategies for decades, but they used to require dozens of interns pouring over news clippings) in our next totally free training seminar. Just sign up for a spot using the button below:
Today’s Top Performer: SteadyMed (NASDAQ:STDY)
SteadyMed is a specialty pharmaceutical development company. They’re broadly focused on creating therapies “to treat orphan and high-value diseases with unmet parenteral delivery needs.”
Their leading potential offering is Trevyent, a drug-device combo that melds SteadyMed’s PatchPump technology with treprostinil, a treatment for PAH (Pulmonary Arterial Hypertension).
Today, they announced they are being purchased by United Therapeutics. United will pay $4.46 per share, with an additional $2.63 per share for the achievement of Trevyent developer milestones. The total purchase price, assuming eventual completion of milestones, comes to $216 million.
This purchase price represents a substantial valuation premium for STDY, and the stock is dramatically surging since the announcement. It sits up over 75% at the time of this writing. Current market pricing reflects only partial confidence in the receipt of the development milestone payment.
Pharmaceutical plays continue to be a consistent source of dramatic one-day profits for News Quantified users. Development companies can be virtually impossible for non-experts to value. Consequently, news-based indicators of expert confidence (like today’s acquisition) can lead to huge price changes. This fact makes the sector a particularly target-rich environment for news-based traders.