Passing for Analysis

Occasionally, the general financial press comes up with a comparison or concept that is amusingly obtuse, but it’s less amusing when one considers the likelihood that this reflects the kind of superficial analysis that can drive investor sentiment, and that such shifts in sentiment influence the availability of capital for even a niche like the neurotherapeutics sector. These two recently caught NIR‘s eye:

(Forbes, 5/3/13): According to ‘ETF Channels‘) Biogen Idec Achieves #169 Analyst Rank, Surpassing United Parcel Service

It must surely be champagne time at Biogen-Idec today, with another steppingstone in the business plan executed.  We tried to find out what the next benchmark will be, uncover who must Biogen-Idec pass next in the hearts and minds of Wall Street analysts. Who is #168? But apparently one must pay for that kind of sensitive information. We’d rather speculate–FedEx? Carnival Corporation? Smith & Wesson?

But that  reeked of spot-on market analysis compared to this second example, published online by Street.com (‘StreetWire‘ 4/29/13): “ACADIA Pharmaceuticals (ACAD) pushed the Drugs industry lower today making it today’s featured Drugs laggard. The industry as a whole closed the day up 0.8%. By the end of trading, ACADIA Pharmaceuticals fell $0.21 (-1.6%).”

The blurb went on to say: “TheStreet Ratings rates ACADIA Pharmaceuticals as a sell. The company’s weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and feeble growth in its earnings per share.

Acadia Pharmaceuticals, up over 170% YTD, a “Drugs laggard.” They’d better grow their eps ASAP, or heads will surely roll in San Diego. It’s probably just a coincidence, but the share price did drop the next day. We would prefer to think that a purely computer-generated piece of nonsense like this could not possibly move the stock price, but it probably did. No wonder it is hard to garner support for the kind of longterm perspective  required for genuine investment in neurotherapeutics.

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