2 Hot Analyst Reads For Tuesday, October 23rd

A synopsis of a couple of late analyst calls that could buoy these small cap biotech stocks in trading tomorrow

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After deep early losses, the biotech sector has bounced back strongly. The SPDR Biotech ETF (XBI) is now up one percent as we head into the last trading hour of the day.

Hopefully we can end a day for once in the green here in October. Here are two small biotech stocks getting some analyst praise this afternoon.

Cantor Fitzgerald really likes Neos Therapeutics (NEOS) today. They reissue their Buy rating and $20 price target (the stock currently trades just over $4.00 a share) and the following commentary.

The peak sales potential of Neos’s ADHD platform and its pipeline are underappreciated, in our view. We think continued success with the uptake of: Adzenys ER in 2018+ as well as pipeline advancements will drive upwards earnings revisions to levels not reflected in the consensus and move Neos’s stock higher. Valuation Summary We use a blend of DCF and multiples (EV/EBITDA) analysis to get to our 12-month price target of $20.”

We agree this small cap biopharma is deeply undervalued even if we are not as optimistic as Cantor. The company did receive a lowball hostile $10.25 a share takeover offer from PDL Pharma earlier this year.

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A different analyst at Cantor likes Intra-Cellular Therapies (ITCI). They reiterated their Buy rating and $32 price target and offer this view.

Core to our investment thesis is the complete NDA filing for lumateperone in schizophrenia, which we believe has a high probability of approval based on two large studies that met their primary endpoints and a positive pre-NDA meeting with FDA. In addition, Luma’s differentiated pharmacology results in tolerability and a benign safety profile unlike other approved APs.”

Lumateperone has an FDA decision date scheduled at the end of this year. I would look for the stock to run up somewhat into that event.

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