Vital Therapies was downgraded to Underperform from Buy and the price objective was slashed to $5 from $40 at BofA Merrill Lynch.
Canaccord Genuity maintained its Buy rating, but lowered its price target down to $8 from $35. The downgrade from Canaccord Genuity said:
We maintain our Buy rating and lower our price target to $8 based on our probability adjusted net present valuation, which includes $3/share in net cash. We reached our price target based on reduced market opportunity for ELAD in a narrow subset of AILD patients assuming success, and risk of a still to be determined design of a new Phase 3 trial.
Other analyst downgrades were seen as follows:
- Credit Suisse cut the rating to Neutral with a $9 price target.
- SunTrust Robinson Humphrey downgraded its rating to Neutral from Buy with a $5 price target.
- William Blair cut its rating to Market Perform from Outperform.
The real question now is whether or not Vital Therapies remains vital or irrelevant. Any time a drop of 77% is seen in the price of shares in a single session, usually the fear is that a company is now irrelevant and has little or no assured future.
Vital Therapies saw its stock down 77% at $3.96 on Monday, and this stock would have faced a crush-depth selling frenzy whether the market was volatile or not. Its $95 million market cap comes with a 52-week range of $3.51 to $29.67 and law firms have already announced their investigations into whether or not a class action law suit will be mounted on behalf of shareholders.
That $95 million market cap compares to a June 30, 2015 cash balance of $73.3 million and it had an average burn rate of just over $14 million in each of the last two quarterly periods.
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