Buy AMAG Pharmaceuticals, and Sell Seres Therapeutics.

By Joe Duarte • December 21, 2016

I am issuing a Buy recommendation on AMAG Pharmaceuticals (NSDQ: AMAG), a biotech company focusing on improving treatments for common but serious diseases such as complications of pregnancy and anemia. The stock is starting to show signs of accumulation and could deliver a significant intermediate term gain. Buy AMAG Pharmaceuticals up to $38.

It’s time to close the books on Seres Therapeutics (NSDQ: MCRB). The stock has never recovered from its disastrous clinical trial failure in August. The silver lining is this loss offers an opportunity to offset the many gains we have had throughout the year. Sell Seres Therapeutics.

I will have more on both of these stocks in the next issue of BTP Weekly.

I own both of these stocks.

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Frank L.

01/09/17 ‐ 1:50pm ET January 9, 2017 at 1:50pm ET

Wow, what has contributed to this huge drop in AMAG Pharma? I do not understand why it is down over 35% on a Raymond James downgrade??

Joe Duarte

01/09/17 ‐ 1:59pm ET January 9, 2017 at 1:59pm ET

I am monitoring AMAG carefully. Here are some summary thoughts for now.

Shares of AMAG Pharmaceuticals, a biotech company engaged in medications to address obstetrical and gynecological conditions, were sold off aggressively on 1/9/2017. The company pre-announced its Q4 earnings (unaudited) in the pre-market. Sellers were disappointed in the company’s forward guidance and its quarterly sales growth which was 20% year over year. Analysts were expecting 40% sales growth. Revenues and earnings were within the company’s guidance.
The action on the day looks terrible. However, given the company’s current market share with its premiere product, Makena, and the fact that it is still delivering 20% growth and not reducing its guidance suggests that the selling is overdone. The company is scheduled to appear at a conference on 1/10/17 and should provide more details.
There is support at $22.

Rick

01/09/17 ‐ 3:37pm ET January 9, 2017 at 3:37pm ET

Joe,

For what it is worth, this does seem like the reaction is disproportionate to the information. So, I decided to take a flyer on the Jan 20 $23 calls. If there is a bounce, it will be a quick profit. Hopefully the explanation at the Jan 10 conference will create a reversal.

Frank L.

01/09/17 ‐ 3:39pm ET January 9, 2017 at 3:39pm ET

Thank you for the enlightening information. I’ve decided to average down and have just brought a few thousand shares at $23.00.

Joe Duarte

01/09/17 ‐ 5:40pm ET January 9, 2017 at 5:40pm ET

I bought some shares today myself. Time will tell of course. it seems as if 20% growth and no change in what seems like very good results should not have caused this much damage. The analyst down grades may have made things worse than they might have been otherwise.

Mark D.

01/09/17 ‐ 5:52pm ET January 9, 2017 at 5:52pm ET

Time to bail on AMAG bars in today’s free fall?

Mark D.

01/09/17 ‐ 5:54pm ET January 9, 2017 at 5:54pm ET

Sorry – missed the thread.

Joe Duarte

01/09/17 ‐ 10:29pm ET January 9, 2017 at 10:29pm ET

It’s too early to tell at this point. Tomorrow’s conference may give more detail and the stock could bounce some. Unfortunately biotech is a very fickle world. I’m monitoring the stock and will either post news here if there is any or send an alert if we need to make a change.

Joe Duarte

01/10/17 ‐ 10:13am ET January 10, 2017 at 10:13am ET

AMAG is scheduled to present at JP Morgan Health conference in San Francisco at 2:30 Eastern Time.
I will be monitoring. For more info go here:

https://globenewswire.com/news-release/2017/01/03/902782/0/en/AMAG-Pharmaceuticals-to-Present-at-the-35th-Annual-J-P-Morgan-Healthcare-Conference.html

Guest User

01/11/17 ‐ 9:37am ET January 11, 2017 at 9:37am ET

Hi Joe,
I bought AMAG on Jan.3rd, and on the 6th it went down 35%. I realize this is something that you didn’t see coming when you recommended the stock. Do you have any insight on when it will come back up?
Thanks

Joe Duarte

01/11/17 ‐ 5:03pm ET January 11, 2017 at 5:03pm ET

As I’ve said in previous posts here and in my article on the stock, the growth rates for Makena, the flagship product are pretty respectable. I think the market over reacted to the pre-released earnings report. The fact that the stock is groping for a base is encouraging. Beyond that, it’s anyone’s guess what happens next, although the fundamentals of the company argue for this to be short lived. I am monitoring the stock and I own shares, so I have a personal interest in how this shakes out. See my January 9 post here for more. Joe Duarte

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