Why InterMune Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of InterMune (NAS: ITMN) sank 10% Monday after several analysts downgraded the biotechnology company.

So what: Fools know to take Wall Street opinions with a grain of salt, but delays with the European launch of InterMune's anti-lung-scarring drug Esbriet are forcing analysts to lower their price targets in tandem. While the company is making progress with the drug, multiple delays in pricing decisions add yet another cloud of uncertainty over the stock.

Now what: I'd be cautious about pouncing on this pullback. "What matters in the end is sales," Wall Street firm Jefferies wrote in a note to clients, noting concerns about matters including delayed launches and decreased pricing power. "We view consensus numbers need to come down significantly." When you couple those tailwinds with the stock's stomach-churning beta of four, InterMune remains best-suited for speculative types.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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