3 Horrendous Health-Care Stocks This Week

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Why wait until the end of October for a few Halloween scares? Some health-care stocks managed to frighten investors in the first few days of the month. Here are the three most horrendous performers for the week.

Achillion Pharmaceuticals takes the worst spot this week. Shares plunged 62% on bad news from the U.S. Food and Drug Administration.

In June, the FDA placed Achillion's hepatitis C drug sovaprevir on clinical hold because some patients experienced elevated liver enzyme levels in a phase 1 study. The company moved quickly to respond to the FDA's concerns, but that response wasn't enough. The FDA decided to keep the clinical hold in place.


While Achillion has a few other drugs in its pipeline, this amounted to a huge setback for the company. Management stated that it will work with the FDA to try to resolve the agency's concerns, but that could prove to be an uphill battle.

Credit Suisse slashed its price target for Arena Pharmaceuticals . Shares dropped 16% in response. 

After reviewing prescription data from the past three months, Credit Suisse analyst Lee Kalowski said that sales of Arena's obesity drug Belviq are likely to fall well short of previous projections. Kalowski downgraded the stock to underperform and cut the price target for Arena from $5 to $4.

That wasn't the only analyst action in the obesity drug market. Cowen initiated coverage on Arena and one rival -- Orexigen Therapeutics . The investment firm also upgraded Vivus

Unfortunately for Arena, Cowen was much more bullish about Orexigen and Vivus. Analyst Simon Simeonidis said that Vivus appears poised to become the market leader and that Orexigen has a shot at emerging as a significant threat.

Generic drugmaker Lannett  also fell almost 16% this week. There weren't any outside forces impacting the company's shares, though. Lannett's woes were self-inflicted.

On Friday, Lannett announced the pricing of a secondary share offering. When a company offers shares for 14% below where the stock was trading, it tends to drag shares down. That's what Lannett did, with its stock suffering the consequences.

In the big picture, though, this week's drop is just a blip for Lannett. The stock has more than quadrupled so far this year. Record-high sales and earnings in 2013 have powered its shares steadily.

Picking the best of our three horrendous health-care performers is an easy task this week. Arena certainly faces difficult challenges from rivals. Achillion's road to recovery must go through the FDA. Lannett's decline, though, should prove temporary.

That doesn't mean that the generic pharmaceutical company will continue to enjoy the kinds of gains that it's had over recent months. It won't. Even with moderating growth, though, Lannett could be one to keep on your watchlist.

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The article 3 Horrendous Health-Care Stocks This Week originally appeared on Fool.com.

Fool contributor Keith Speights has no position in any stocks mentioned, and neither does The Motley Fool. 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 Motley Fool has a disclosure policy.

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