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The Call of the Day: Is Dendreon Done-dreon?

Is Dendreon Done-dreon? A rough day for the Seattle drug company, Dendreon after it withdrew its sales forecast for its only product, Provenge, which is used to fight prostate cancer. Shares plummeted as soon as the market opened. The company blames the lack of clarity on worries among doctors that they may not get reimbursed for using Provenge, which costs $93,000 for a round of treatment. The news was followed by an avalanche of downgrades.

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CNBC.com

But here is the call of the day.

Canaccord Genuity lowered its price target on Dendreon shares 70 percent shares to $19 from $65.

However, it did not change its BUY rating.

"Post-market price indications do not warrant a rating change at this time, in our view," says analyst George Farmer.

So...let me get this straight. The stock was a BUY yesterday when it was at $35.84. It's still a BUY now that it's around $12. Really? I could buy the argument that it's a BUY now, because $12 is a lot closer to 0 than $35 is. Seems like it should have been a SELL yesterday. The market certainly believes it's a SELL right now.

Yet maybe I should hold off bulking up on Dendreon shares today (assuming CNBC would even let me own individual equities, which it doesn't).

Canaccord's own report—the one maintaining a BUY—says, "Possibly, in our view, low demand could also be contributing to commercial lag. Provenge supply had been intentionally constrained since May 2010 launch, lending no insight into true product demand."

So...to recap. The stock is tanking, the company has withdrawn its sales forecast, we don't really know what demand is, and doctors are worried about getting reimbursed. But it's a BUY! Why? "We continue to believe that the Provenge clinical profile is perfectly suited for the intended prostate cancer customer," says the Canaccord report, "and we still see high uptake when, if ever, reimbursement concerns lift." Well, that's comforting, when, if ever, investors stop selling.

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