Addition to the portfolio: HRMY stock analysis, prediction, price targets

Another addition to my portfolio is HRMY stock (Harmony Biosciences Holdings, Inc.). I was not planning to add new positions as wanted to reduce the margin on my account. However, this stock piqued my interest enough to buy.

The company has just recently been listed through IPO, so we don't have a long history of price movement. Also, the price has been quite volatile.

The company has been growing its revenues nicely and has actually reached profit in the most recent quarter ending September 2020.

Analysts are predicting the company will continue on this path of revenue and earnings growth in the next few years.

Source: https://simplywall.st/stocks/us/pharmaceuticals-biotech/nasdaq-hrmy/harmony-biosciences-holdings#future

With growing revenue, analysts are predicting the company will get to EPS of $3.36 by the end of 2022 and EPS of $6.25 by the end of 2025.

Using these EPS predictions and a P/E ratio of 20, we could target a price of $67 for 2022 and a price of $125 for 2025.

Analysts Price Targets:

There are analysts covering the stock. 2 of them have a 'BUY' rating for the stock and 1 has a 'HOLD' rating. The average target price provided by the analysts is $52. The target prices range from $41 to a high of $61.

Source: https://www.marketwatch.com/investing/stock/hrmy/analystestimates?mod=mw_quote_tab

Institutions have been aggressively buying the float of HRMY stock as seen below looking at the number of increased and new positions:

https://www.nasdaq.com/market-activity/stocks/hrmy/institutional-holdings

Reading the investors' presentation Harmony Biosciences Holdings, Inc. is currently a one-product company. It sells WAKIX (pitolisant) which is a novel drug to treat Narcolepsy. The total market for the USA is $1.8 billion a year, and this does not count Europe. The currently available options have low Satisfaction with current treatments. Top unmet needs cited:

Risk of abuse, tolerability, need for more effective treatment options, new MOAs, and more convenient dosing

• Until WAKIX®, all FDA-approved products scheduled as controlled substances by DEA.

It does seem to look the most recent 2 quarters, that sales for the product are growing quickly. Looking at the drug reviews in the link below, it does seem many users were unhappy about their previous drugs and are quite excited about WAKIX. They also cite the annual price for WAKIX is $135K per year. This is a hefty payment and! people are stating that this drug is covered by their insurance companies.

https://www.drugs.com/comments/pitolisant/wakix.html#:~:text=I%20can%20laugh%20really%20hard,%2C%20and%20wake%20up%20too.%E2%80%9D&text=For%20Narcolepsy%3A%20%E2%80%9CBeen%20on%20Wakix,months%20along%20with%20my%20adderall.

The last thing I loved about this company is the combined experience of its management and that the investor presentation states they plan to use the proceeds from WAKIX to acquire more drugs.