Stocks are under fresh pressure after new Federal Reserve chairman Jerome Powell sounded a hawkish note in his first appearance before Congress this week. The odds of four quarter-point rate hikes is now rising fast, pressuring long-term Treasury yields higher, bringing back the headwind that pushed stocks into a correction earlier this month.
Moreover, the rapid rebound from the panic lows seen a few weeks ago was historic in its own right. But history also suggests such a rapid rebound burns out the hope and enthusiasm that a slow burn push to new highs would’ve required. That sets the stage for a test of the lows and a few months of churning, listless action.
Sellers are hitting high-risk/high-return biotech stocks particularly hard. Here are five stocks to sell right now:
Biotech Stocks to Sell: Valiant Pharmaceuticals (VRX)
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) shares are down more than 10% in trading on Wednesday after reporting better-than-expected quarterly results as forward guidance disappointed. The company said it sees fiscal 2018 revenues of between $8.1 and $8.3 billion vs. the $8.37 billion analysts were expecting. The result takes shares back down to their 200-day moving average and sets up a test of the early November lows.
When the company last reported on Nov. 7, earnings of 98-cents-per-share beat estimates by 2 cents despite a 10 percent drop in revenues.
Biotech Stocks to Sell: Acadia Pharmaceuticals (ACAD)
Acadia Pharmaceuticals Inc. (NASDAQ:ACAD) shares have collapsed more than 17% — falling out of a multi-month trading range going back to November — after the company reported results on Tuesday. The company reported a loss of 55-cents-per-share, 2 cents ahead of estimates, on a 263% rise in revenues. Forward guidance was weak, however, causing sellers to push shares back down to levels not seen since June.
The company will next report results on May 29.
Biotech Stocks to Sell: Exelixis (EXEL)
Exelixis, Inc. (NASDAQ:EXEL) shares are falling towards their 200-day moving average, threatening to break down out of a powerful uptrend going back to early 2016 that saw shares rise more than 9x from lows below $4-a-share.
The company will next report results on May 28, after the close. Analysts are looking for earnings of 12-cents-per-share on revenues of $136.8 million. When the company last reported on Feb. 26, earnings of 12-cents-per-share matched estimates on a 54.8% rise in revenues.
Biotech Stocks to Sell: Atara Biotherapeutics (ATRA)
Atara Biotherapeutics Inc (NASDAQ:ATRA) has slipped below its 20-day moving average for the first time since December after the company filed a $150 million secondary offering. That resulted in a downgrade from analysts at JMP Securities. This follows a downgrade by Citigroup analysts earlier in the month.
The company reported results on Feb. 27, reporting a bigger than expected loss of $1.15-per-share amid an update on its product pipeline. Watch for a 50% retracement down to the 50-day moving average near the $30-a-share threshold.
Biotech Stocks to Sell: Sierra Oncology (SRRA)
Sierra Oncology Inc (NASDAQ:SRRA) shares are threatening to fall out of a month-long trading range that capped a 25% decline from its late December high. Shares more than tripled from the lows seen last summer, but now look vulnerable to some profit taking after the company reported results on Tuesday.
The company reported a loss of 20-cents-per-share, 2 cents ahead of estimates, and it estimated that its current cash horde should sustain development though the middle of 2019.
Anthony Mirhaydari is the founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
