4 Hot Analyst Morning Reads For Tuesday, September 25th

A synopsis of recent analyst activity that could buoy these small cap biotech stocks in trading today

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The biotech sector had a solid day in the first trading day on the new week yesterday while the overall market was mixed. The main biotech indices were up a tad over one percent on Monday. The big winner was small cap Amarin Corp. (AMRN) which soared over 300% on positive trial results.

Today, we will go for two days in the black in a row. Here are four small biotech/medical stocks garnering positive analyst attention this morning before the bell.

Cantor Fitzgerald reiterates their Buy rating and $10 price target on Marinus (MRNS) this morning after recent positive mid-stage study results. Here is what Cantor's analyst had to say about the trial data.

"Given the compelling Phase 2 data announced in CDD, market size potential in PPD, and undervaluation relative to peers, we believe Marinus shares offer a compelling risk- reward profile. The company has three important data read-outs remaining in 4Q18, which we believe could become significant catalysts for the shares. Valuation Summary We arrive at our 12-month PT of $19/share by assessing the after-tax, risk-adjusted NPV of potential future cash flows from ganaxolone for the treatment of postpartum depression and CDKL5 deficiency disorder.”

Since no analyst activity since the second week of August. Analysts are rallying around Verastem (VSTM) today. Roth Capital ($14 price target), H.C. Wainwright ($15 price target) and Oppenheimer ($16 price target) are all reissuing Buy or Outperform ratings on the stock today as the company's duvelisib was approved as expected by the FDA after the bell on Monday. Here is the color from Oppenheimer on Verastem.

The approval of duvelisib (Copiktra) for third-line CLL and FL is in line with our expectations. We had anticipated an approval in the relapsed/refractory settings for these diseases by early October 2018. While we have not included any sales of Copiktra (duvelisib) until Q1 2019, it is likely the drug will contribute modestly to revenue in 2018, due to Verastem’s readiness to detail and distribute the drug. We are not adjusting our outlook until the drug is launched and we have a better sense of early adoption patterns. We believe Copiktra meaningfully adds to the armamentarium for patients who have failed two prior therapies.”

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Despite some so-so mid-stage trial results reported yesterday, H.C. Wainwright is reissuing their Buy rating and whopping $30 price target on Syndax Pharmaceuticals (SNDX) this morning. Here is how Wainwright arrived at their price bogey.

“Valuation: We base our $30 price target on probability-adjusted revenue forecasts for entinostat in combination with other drugs in advanced HR+, HER2- breast cancer, NSCLC, and metastatic melanoma. We use the net present value of our revenue forecast through 2027, apply a 35% POS for HR+, HER2- breast cancer, and 10% POS for NSCLC and melanoma, with a 3x price/sales multiple, and we value the early stage pipeline at $10 million, the amount of the upfront payments the company made to acquire the menin inhibitors and SNDX-6352, to arrive at our price target.”

Finally, Jefferies lowers their price target on Fate Therapeutics (FATE) from $25 to $23 per share to account for a recent equity raise today. Here is the commentary from Jefferies' analyst

Lowering price target for Fate Therapeutics to $23 to account for dilution from the equity issuance. Now estimate Fate holds proforma cash of $223M to advance and expand its clinical pipeline of off-the-shelf Natural Killer cell and CAR-T therapies.

And those are four small cap biotech and medical device stocks garnering positive analyst commentary this Tuesday. Happy Hunting.

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