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4 Reasons JPMorgan Just Downgraded Merrimack Pharmaceuticals

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4 Reasons JPMorgan Just Downgraded Merrimack Pharmaceuticals

JPMorgan has downgraded Merrimack Pharmaceuticals Inc (NASDAQ: MACK) to Neutral from Overweight and cut the price target to $7 from $8, citing the belief that shares would be range bound in the near to intermediate term amid the company's ongoing strategic review.

Earlier this week, Merrimack announced the exit of CEO Robert Mulroy. The company also cut 22 percent of its workforce to save more than $200 million in expected costs over the next two years.

Related Link: Merrimack Pharmaceuticals Falls Back To Support Following JPMorgan Downgrade

Following are the four reasons behind JPMorgan's downgrade:

    1. "Our view that 2016 consensus estimates, while achievable, are perhaps not meaningfully beatable (and 2017 needs to moderate incrementally, in our view)."
    2. "Key pipeline catalysts, while underappreciated, are weighted 2Q17+."
    3. "Our expectation that R&D prioritization and search for a new CEO could take time (currently no timelines outlined)."
    4. "A continued financing overhang (~12 months of cash)."

Analyst Anupam Rama believes the current 2016 Onivyde estimate of about $60 million (JPMorgan estimate: $57.2 million) is achievable but perhaps not meaningfully beatable.

Looking ahead to 2017, the analyst believes consensus estimates will likely need to come down incrementally (consensus: $108 million; JPMorgan estimate: about $96 million).

Rama cut his FY16–18 GAAP EPS estimates to ($1.19), ($0.41), and $0.08, respectively, from ($1.18), ($0.74), and ($0.26).

At last check, Merrimack was down 7.32 percent at $5.54.

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Latest Ratings for MACK

DateFirmActionFromTo
Oct 2018MaintainsNeutralNeutral
Jun 2018MaintainsNeutralNeutral
Jun 2018DowngradesNeutralUnderweight

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