Aceto Corporation (NASDAQ: ACET) is having an overwhelmingly rough start to the trading session this morning, losing more than half of its value before the opening bell. So, what’s the deal? The company is facing several challenges on both a financial and corporate level, and this morning, it has informed its investors of these challenges. Today, we’ll talk about:
- The challenges ACET faces;
- what we’re seeing from the stock;
- and what we’ll be watching for ahead.
ACET Takes A Dive On Challenges
As mentioned above, Aceto Corporation is having an incredibly rough start to the trading session this morning after announcing challenges and proactive steps to address those challenges. In a press release issued early this morning, the company announced that due to persistent adverse conditions in the generic medications market, it has decided to start negotiating with its bank lenders with the goal of reaching a waiver of its credit agreement. ACET said that the news is with respect to its total net leverage and debt service coverage financial covenants.
In the release, the company further upset investors when it stated that the financial guidance that was issued on February 1, 2018, should no longer be relied upon. The company also said that it now anticipates recording non-cash intangible asset impairment charges that will range between $230 million and $260 million on some of its currently marketed products as well as some of its pipeline products. In the release, the company said that this was the result of intense competitive and pricing pressures. In a statement, Al Eilender, Chairman at ACET, had the following to offer:
Given continued headwinds in the generics market, the Board has taken decisive action by bolstering the Company’s senior leadership, engaging in proactive discussions with its secured lenders, and initiating a thorough evaluation of strategic alternatives. The Board looks forward to working with and supporting management throughout this process and appreciates the continued dedication of its employees and other stakeholders while it navigates this difficult industry environment.
What We’re Seeing From The Stock
With the news that Aceto is struggling and being forced to take steps to ease financial and corporate pressures, investors definitely aren’t happy. Of course, this can be seen in the price of the stock this morning as it tumbles. As is almost always the case, our partners at Trade Ideas were the first to alert us to the declines. Currently (8:40), ACET is trading at $3.50 per share after a loss of $3.90 per share or 52.70% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on ACET. In particular, we’re interested in following the company’s plans to negotiate with its lenders in an effort to ease financial pressure. However, it must go further than negotiation. At the end of the day, to stay relevant, ACET is going to have to find a way to grab onto a competitive edge in the market. If it can’t compete, it will continue to face these issues. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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