(Note: this report can also be found on The Tradechange independent research section.)
This is a brief analysis on three small cap movers on January 24th with speculation on why they moved, and where they'll go from here. These three stocks moved dramatically from analyst reports.
The stocks are AUPH, TGH, and WATT.
1. Aurinia Pharam (NASDAQ:AUPH) Up 19% to $3.13, $164M market cap.
There wasn't any public news on why AUPH was up. The likely reason is from a Mackie Capital Research Speculative Buy Recommendation on 1/23/17:
Brief Overview of our Top Picks for 2017 Aurinia Pharmaceuticals (AUPH-NASDAQ/AUP-T) - SPECULATIVE BUY - US$8.00 TP
• Aurinia is focused on developing a novel, first-in-class, lupus nephritis treatment, Voclosporin which is entering a Phase III trial.
• Voclosporin achieved its primary endpoint in Phase IIb trial, demonstrating solid efficacy and with a fairly good safety profile.
• 48-week data from the Phase II trial is expected in Q1 2017 which we believe should help to alleviate investor concerns about drug safety.
• A Phase III trial (named AURORA) is anticipated to initiate in Q2 CY2017 with top-line results expected in H1 CY2019.
• Aurinia may decide to license out Voclosporin to European and Japanese partners in 2017. Regardless of that decision, we believe the company becomes an ideal acquisition target once the Phase III study kicks off. This is a first-in-class drug candidate for a disease with an unmet medical treatment.
AUPH has gone up every day from 1/18-1/24. It also steadily went up since it hit a low from its financing on December 30, 2016. Today was like a bottleneck effect, when there's some big buyers slowly accumulating, and then an analyst initiates a buy with a high price target, the stock shoots up as they all rush to quickly buy. On 1/9 there was a 13D filing, a fund reported a 11.4% holding. It's tough to predict where the stock will go from here, as there is bullish sentiment but it has already gone on a strong run since their stock offering on 12/30.
2. Textainer Group (NYSE:TGH) up 17% to $13.60, $770M market cap.
Pretty remarkable that a stock of this high market cap goes up strong two days straight just off an upgrade to outperform at Cowen. Then on 1/27, it goes up higher, to $14.40.
Analyst Helane Becker raised TGH's PT to $15 from $8. This was a much higher PT, almost double the previous one. TGH leases dry freight containers. This upgrade was done in the PM on 1/23. The stock then opened at $10.85, after closing the previous day at 10.35. It closed 1/23 at $11.65. Then opened on 1/24 at $11.65 and ended that day at $13.60. The behavior of TGH as well as AUPH show that stocks are reacting strongly to analyst opinion. The stock probably will fade a little today, but it still went on a strong 2 day run, a situation to look for in the future.
3. Energous (NASDAQ:WATT) down 14% to 15.25, $292M market cap.
On 1/23 midday, respected research firm Copperfield Research published a bearish article on WATT. The stock had opened the day at $18.48 and closed at $17.71 for a small 4% decline. The real carnage happened the next day, when Oppenheimer followed up on the morning of 1/24 and downgraded WATT to perform from outperform, saying the stock is above his price target of $15, and unable to become more constructive until WATT starts shipping product. WATT had strong support at $15 on the day, right where the analyst's PT is. WATT will likely bounce the next day, but be on watch if the company delays product shipments. The stock would likely fall to the $13s or lower.
Update: In fact, the stock did continue to slide the next 2 days into the $13s.