Bullish options flow was detected in AMRN stock today while dark pool sell activity has begun and that means a blood bath could await long call buyers and bulls in the stock.
Today’s options flow in AMRN stock has longer dated options so we’re not just talking about roulette call options. There are February and March $25 strikes, and even a January 17th $30 strike.
Bad Things Lurk In Dark Pools
We detected unusual dark pool activity today in AMRN stock. Two large block orders came off the dark pool at 11:15 AM (Pacific time) within two seconds of each other that totaled about 800,000 shares worth $18 million.
The dark pool orders look like sell orders because of how AMRN stock price responded to this whale trade by rolling over and eventually heading down. Notice the large block order in after-hours trading (brown shaded area) right after market close on December 16, 2019. This wasn’t a dark pool order but look at how the price of AMRN stock responded immediately after the trade.
The final piece of evidence that suggests the unusual dark pool activity today was a big seller(s) trying to hide their trades is what they are actually saying about the stock.
My guess is that the dark pool sell orders were likely from Stifel or Oppenheimer reducing their positions in AMRN stock.
Stifel analyst Derek Archila downgraded Amarin (AMRN) to Hold from Buy with a price target of $28, up from $26, after the FDA approved Vascepa for an expanded indication as an adjunct therapy in patients on statins with high triglycerides who have established CV disease and also for diabetic patients with greater than 2 cardiovascular risk factors. While he said “there is no doubt in our mind Vascepa will be a multi-billion dollar product,” Archila prefers to “take profits” at the stock’s current valuation near $11B fully diluted. He also points to unpredictability around Vascepa’s intellectual property litigation, the drug’s “relatively short” exclusivity period, and AstraZeneca’s (AZN) Epanova CVOT results next year as downside risks.
Oppenheimer analyst Leland Gershell says that he thinks constraints on the new indication appear to imply a target patient number of just 5M-8M, which he says is low compared to that anticipated by bulls. He maintains an Underperform rating, saying he is concerned that Street projections overestimate Amarin’s profitability, especially in the out-years, the sizable M&A component of current valuation is at risk, and says investors will give increasing consideration to emerging competition within the prescription omega-3 class.
Cantor Fitzgerald and H.C. Wainwright are still on the long side.
Cantor Fitzgerald says the FDA’s approved patient population of Amarin’s Vascepa is in-line with Street expectations, Cantor Fitzgerald analyst Louise Chen tells investors in a research note. The agency on Friday approved the use of Vascepa as an adjunctive therapy to reduce the risk of cardiovascular events among adults with elevated triglyceride levels of 150 milligrams per deciliter or higher. Vascepa is the first FDA approved drug to reduce CV risk among patients with elevated triglyceride levels as an add-on to maximally tolerated statin therapy, Chen points out. The analyst thinks the peak sales potential of Vascepa is underappreciated. Upward earnings revisions to levels not reflected in consensus expectations should drive Amarin shares higher, contends Chen. The analyst affirms an Overweight rating on the stock with a $35 price target.
H.C. Wainwright says, “We now have further clarity on the breakdown of labeling, which we interpret positively in terms of our expectations,” H.C. Wainwright analyst Andrew Fein tells investors in a research note. He believes that characterization of triglyceride levels at 150mg/dL or higher did not come as a surprise, despite incorporation of patients with triglyceride levels as low as 135mg/dL in the REDUCE-IT trial. The analyst continues to think physicians can utilize their best judgment in assessing whether to assign the proven benefits of Vascepa in cardiovascular risk reduction when evaluating at-risk patients. Fein points out that his omega-3 proprietary physician survey indicated broad physician support for utilizing Vascepa with an expanded label in CV risk reduction. He reiterates a Buy rating on Amarin shares with a $51 price target. Fein maintains his current Vascepa sales revenue estimates of $416M in 2019 and $663M in 2020.
All of this is speculation on just one day of trading and so we need confirmation that institutional traders are trying to hide their sell orders over dark pools. If they are, we would expect to see more dark pool sell orders hit AMRN stock over the coming days and weeks. If that happens, those buying call options today are going to get killed.
Be very careful trading AMRN stock right now folks. We don’t want to get caught in the cross-fire as Bull vs Bear institutional investors battle it out.