Amino Technologies and Indivior shares in freefall

by Graeme Evans from interactive investor |

They've had a shocking time, but both these dog stocks still have an opportunity to redeem themselves. 

A painful few months for shares in drug maker Indivior (LSE:INDV) and connected TV firm Amino Technologies (LSE:AMO) became a whole lot worse today, with fresh double-digit percentage declines reflecting their uncertain prospects in 2019.

Indivior is now lower by a spectacular 80% since June following today's plunge of up to 25% in early trade. That was triggered by a disappointing US court ruling that appears to pave the way for rivals to start selling generic versions of its Suboxone film treatment for opioid addiction. The Slough-based firm warned that this could mean an 80% loss of market share for the product within months.

For AIM-listed Amino, the share price decline since September is now nudging 60% after the Cambridge-based company accompanied today's expected 26% drop in 2018 profits with a warning that 2019 results will also be down some 10%.

Amino, whose "TV Everywhere" technology is helping meet consumer demand for multiscreen and multi-device services, blamed challenging economic conditions and rising component costs, as well as its decision to exit from low margin, commoditised hardware activities. This updated strategy will contribute to Amino reducing revenues by 21% this year.

Despite the expected slowdown, Amino continues to see good opportunities from the disruption of the pay-TV market as operators are forced to consider alternative options for delivering video content to their subscriber base.

Source: TradingView (*) Past performance is not a guide to future performance

Chief executive Donald McGarva is confident that set-top boxes will remain the cornerstone of a modern TV experience, providing an opportunity for Amino software to allow operators to meet the challenge of TV being watched on "any device, anytime and anywhere".

His confidence in this strategy is underlined by today's pledge to maintain the dividend at its current level for at least two years. This follows seven successive years of increases, including the 10% rise to 7.32p announced alongside the annual results.

The dividend remains well-covered, with continued strong cash generation and an increased year-end cash balance of US$20.3 million also offering the potential for M&A opportunities.

Andrew Darley, an analyst at house broker finnCap, adjusted his target price from 260p to 185p following today's update. He said this was supported by an expected 4% dividend yield during a period of transition, which he believes should lead to greater visibility and earnings quality.

Dr poses threat to Indivior 

Indivior investors, meanwhile, have been struggling for visibility since the company announced in the summer that it would be unable to provide guidance on 2018 results while court wrangles over Suboxone continued.

Indivior intends to appeal yesterday's US appeals court decision, but the company is braced for Indian firm Dr Reddy's and Alvogen to launch their own US versions as soon as next week.

Indivior CEO Shaun Thaxter admitted that the company faces "major disruption in the immediate future" from a potential material and rapid loss of market share by our Suboxone film product". 

He added: "We have been taking prudent steps toward this eventuality with our contingency plan, including reducing debt and certain operating expenses, while preserving a strong cash balance."

Formerly known as Reckitt Benckiser Pharmaceuticals, Indivior was spun out of Reckitt Benckiser (LSE:RB.)  in 2014 at 120p, with shares rising to 490p in June and analysts eyeing a potential share price of 640p. The stock is now below 100p, having hit a low of 83p in December.

Source: TradingView (*) Past performance is not a guide to future performance

Indivior is due to release annual results next week, with the performance of Sublocade, its new injectable version for moderate-to-severe opioid use disorder, now likely to be under even greater scrutiny.

Donald Trump's declaration of the US opioid crisis as a national emergency means that there is a big opportunity to capture for Indivior. However, competition and legal uncertainty ensure that this is a stock where the risk/reward needs to be considered very carefully.

*Horizontal lines on charts represent levels of previous technical support and resistance. Trendlines are marked in red.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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