Needham & Company Downgrades Senomyx (SNMX) to Hold
Needham & Company downgraded Senomyx (NASDAQ: SNMX) from Buy to Hold.
Analyst Serge Belanger commented, "SNMX reported 3Q16 financials that exceeded expectations on both top- and bottom-line but the main headline of the quarterly update is PepsiCo.'s (PEP; N/R) decision to not proceed with the national launch of S617-reformulated Mug Root Beer. The potential impact of the decision represented only ~$1.5MM in potential revenues, but the implications are much wider, in our view, as we believe it calls into question the commercial viability of S617. We viewed S617 as SNMX's key near-term value growth driver, as we expected PEP to launch multiple S617-formulated products across different geographies. We are downgrading to Hold given that S617-driven growth now appears unlikely and while Direct Sales is growing, we see no near-term commercial revenue inflection point on the horizon."
Shares of Senomyx closed at $2.65 yesterday.