Avery Schumer
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Avery Schumer in Sector Report,

Here's Why Barclays Downgraded Mallinckrodt

Specialty pharma company Mallinckrodt PLC MNK reported disappointing  results before the open Tuesday,with the weakness stemming from soft sales of its key drug Acthar, which fetched roughly 52 percent of the total sales.

Acthar gel is an injectable formulation used to treat infantile spasms and acute exacerbation of multiple sclerosis. Sales of this key product fell 5.6 percent year-over-year in the quarter, trailing most analyst estimates. 

The Analyst

Barclays analyst Douglas Tsao reviewed the results of Mallinckrodt.

The Rating

The firm downgraded the shares of Mallinckrodt from Overweight to Equal-weight and lowered the price target to $23. The downgrade is based on disappointing Q3 results and a lack of visibility for Acthar, according to Barclays.  Source

We can see a false breakout of the falling wedge. Stochastics are oversold, so the price will surely go up, close the gap and get back inside the falling wedge.

Probably after that we can see a clear breakout and some further upside.