Synergy Pharmaceuticals (SGYP) Stock: Should Declines Be Concerning?

Synergy Pharmaceuticals Inc (NASDAQ: SGYP)

Synergy Pharmaceuticals is having an incredibly rough day in the market today. In fact, based on today’s movement, you wouldn’t know that the stock gained around 6% on Friday. With recent gains in mind, should investors really be concerned about today’s declines? Today, we’ll talk about why we saw gains on Friday, why we’re seeing declines today, and what we can expect to see from SGYP moving forward. So, let’s get right to it…

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Why SGYP Climbed In The Market On Friday

Friday was an incredible day for Synergy Pharmaceuticals, and the gains came for good reason. Nothing seems to get investors more excited than talks of mergers and acquisitions, and Synergy seems to be in the midst of these talks. On Friday, the top news sources were inundated with rumors that SGYP was looking to sell the company. Considering recent movement on the stock, it definitely would make sense. After all, the company has lost around 70% on its share price over the past several months and needs to come up with a way to reward its investors. Considering recent movement with regard to Plecanatide, now seems to be a great time to get an acquisition rolling as SGYP will likely be able to command an incredible premium on the acquisition.

What We’re Seeing From SGYP Today

As mentioned above, Synergy Pharmaceuticals isn’t having the best of days in the market today, and that’s to be expected. You see, price movement in the market tends to happen through a series of overreactions. Therefore, the strong growth on the stock on Friday was nothing more than an overreaction to the rumors that an acquisition was likely on its way. As such, we’re seeing a correction on the stock today, bringing it down to a more sustainable rate. Currently (10:46), SGYP is trading at $3.08 per share after a loss of $0.11 per share or 3.30% thus far today.

What We Can Expect To See From Synergy Pharmaceuticals Moving Forward

Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from SGYP. The reasons for my positive expectations surrounding SGYP are as follows:

  • Acquisition Possibility – As mentioned above, there are rumors flooding the news that Synergy Pharmaceuticals is gearing up to be acquired. If this were to happen, the stock would climb in a big way. After all, acquisitions come with premiums, and premiums mean big returns for investors. Considering what we’ve seen from SGYP over the past several months, an acquisition may be a strong play. So, the cards aren’t yet off of the table there.
  • Plecanatide – For quite some time, I’ve been watching Synergy Pharmaceuticals incredibly closely. During this time, I’ve paid attention to he the clinical studies revolving around Plecanatide, the company’s lead candidate for the treatment of irritable bowel syndrome with constipation (IBS-C). Through the clinical trials, Plecanatide has proven to be an incredibly effective treatment, and I’m expecting the treatment to fly through FDA approval.

So, while an acquisition would likely send the stock soaring, even if an acquisition doesn’t happen, there’s quite a bit of value in Plecanatide. Once the treatment is approved, I’m expecting it to fly off of the shelves, leading to massive gains in the value of SGYP. All in all, things are looking great for the company and its investors.

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What Do You Think?

Where do you think SGYP is headed moving forward and why? Let us know your opinion in the comments below!

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