What Happened?

A number of stocks jumped in the afternoon session after a softer-than-expected inflation report fueled hopes for interest rate cuts by the Federal Reserve. The January Consumer Price Index (CPI), a key measure of inflation, rose by 0.2%, which was less than economists had forecast, with the annual rate cooling to 2.4%. This encouraging data increased market expectations for the Fed to begin cutting interest rates as early as June. The news prompted a rally in Treasuries as their yields fell. While the market's reaction was initially described as a "bumpy ride" due to concerns in other sectors, the favorable inflation data ultimately helped calm Wall Street. Lower inflation is a key prerequisite for the central bank to ease its monetary policy, which is generally supportive of stock valuations.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Generic Pharmaceuticals company Amphastar Pharmaceuticals (NASDAQ: AMPH) jumped 4.7%. Is now the time to buy Amphastar Pharmaceuticals? Access our full analysis report here, it’s free.
• Therapeutics company Novavax (NASDAQ: NVAX) jumped 4.2%. Is now the time to buy Novavax? Access our full analysis report here, it’s free.
• Branded Pharmaceuticals company Organon (NYSE: OGN) jumped 4.6%. Is now the time to buy Organon? Access our full analysis report here, it’s free.

Zooming In On Amphastar Pharmaceuticals (AMPH)

Amphastar Pharmaceuticals’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 29 days ago when the stock dropped 5.3% on the news that a Bank of America analyst lowered the firm's price target on the shares and reports highlighted significant challenges in the company's product portfolio. The analyst trimmed the price target to $30 from $31 while keeping a Neutral rating. Adding to the pressure, the company faced headwinds for its iron sucrose and glucagon products, with sales expected to be much lower than previously thought due to increased competition. For instance, iron sucrose sales were forecasted at around $5 million per quarter, and glucagon sales were anticipated to trend down. Consequently, the company's growth outlook was moderated from double-digit expectations to a range of high-single to low-double digits. This news followed a nearly 4% drop in the stock during the previous trading session, suggesting continued investor concern.

Amphastar Pharmaceuticals is up 8.2% since the beginning of the year, but at $28.63 per share, it is still trading 11.3% below its 52-week high of $32.29 from February 2025. Investors who bought $1,000 worth of Amphastar Pharmaceuticals’s shares 5 years ago would now be looking at an investment worth $1,555.

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