An interesting stock piqued my interest over the weekend: ATNX as I was going through my screeners. The main thing that piqued my interest is the target price of $28.75 with 8 analysts covering the stock. Seven of them give a rating 'Buy', one - 'Hold'. The target price provides for a 147% price increase potential.
The chart for ATNX is also building a bullish formation with a rising wedge. The stock has a hard resistance level at $9.90. The key resistance is $14 and ATNX stock price tried to break it a couple of times arealdy.
The company is expected to rapidly grow its revenue and earnings in the next few years as seen below.
With growing revenue and earnings, the earnings per price are going to increase with analysts expecting the company will turn profitable by the end of 2022. The company is expected to generate the following EPS in the next few years:
2023 - $1.275
2024 - $2.56
2025 - $4.727
At the current price of $11.65 the forward PE for the company at its expected earnings would be:
2023 - $1.275 (P/E of 9.1)
2024 - $2.56 (P/E of 4.55)
2025 - $4.727 (P/E of 2.5)
With EPS of $2.56 and a target P/E ratio of 20 we should be expecting a price of $51.2 before 2024. With EPS of $4.727 the price would be ~$94 by 2025. This would mean 700% appreciation in price.
As you can see, this stock is a bit of a long-term hold, but we should expect price appreciation in 2021 if it continues to grow revenue as expected. This is why the current price target of just $28.75 makes sense.
Let's explore the likely reasons for such analyst predictions for ATNX stock. Are they right?
First, for the recent news:
December 2, 2020 ATNX announced:
Athenex Pharmaceutical Division and Ingenus Pharmaceuticals Announce Availability of Liquid, Ready to Dilute Cyclophosphamide
December 15, 2020 ATNX announced:
Athenex Announces FDA Approval of Klisyri® (Tirbanibulin) for the Treatment of Actinic Keratosis on the Face or Scalp
This one is particularly important because:
Klisyri® (tirbanibulin) is the first FDA approved proprietary product for Athenex
First-in-class microtubule inhibitor indicated for the topical treatment of actinic keratosis (AK) on the face or scalp with a 5-day application course
Klisyri will be manufactured by Athenex
Almirall will launch Klisyri in the U.S. in first quarter 2021
Actinic keratosis is the second most common diagnosis made by dermatologists in the United States.
Almirall will leverage its expertise to support development in Europe and to market the product in all licensed territories. Global peak sales of tirbanibulin are expected to surpass €250 million. Just to put this into context, sales for Athenex Inc. were $101M in 2019.
In addition, Athenex Inc. has quite a few products in development:
As you can see tirbanibulin was approved already. Their next one is being sold in the Pacific and is waiting for approval by the FDA end of February.
When looking at early development companies, I like to find the ones that have a few products in the pipeline, but also have something that is already generating revenue. This was the case with VERU which ran last year. Even if the product is not approved, current products can keep growing and generating revenue. I strongly believe ATNX could be bigger than VERU. Even if estimates are half as good as they are we are still looking at x3 increase in the share price.
It seems both institutions and insiders are quite bullish about the company:
Institutions were adding heavily ATNX to their portfolios, but there is still a large float.
Insiders were also busy buying the shares of their company:
Disclaimer: I own ATNX stock. I do not suggest you should buy any of the stocks I write about. As usual, please do your own due diligence before investing your own money in any of the stocks I write about. The above analysis is quite basic and just gives ideas for further research. A much deeper analysis is required for each stock, including the analysis of operations, debt, etc. I may sell any of the stocks I say I currently own at any moment before it reaches the targets that I set or keep them for even when they reach the target.