As the stocks creeps near an all-time low, Mackie Research Capital analyst André Uddin thinks there is real value in Vancouver-based Cardiome Pharma (TSX:COM, Nasdaq:CRME).
In a research update to clients today, Uddin upgraded Cardiome from “Hold” to “Speculative Buy” and raised his one-year price target on the stock from (U.S.) $2.20 to $2.80, implying a return of 94 per cent at the time of publication.
Uddin says today’s upgrade is based recent share price depreciation that has revealed value and discussions he has head with the company’s management.
The analyst says this seasonal buying opportunity.
“CRME is down 54% since we downgraded it at $3.12 on Oct. 12, 2016, the stock is also down 47% YTD. Our overall stock calls on CRME have generated a 248% return,” he notes. “We believe investors should take advantage of this tax loss selling.”
Uddin says Cardiome has two products to keep an eye on.
“We believe Xydalba (an antibiotic to treat a skin infection called ABSSSI) and Trevyent (a pulmonary arterial hypertension (PAH) drug-device combo) should be CRME’s key growth drivers,” the analyst says. “The company is currently rolling out Xydalba throughout Europe. We assume CRME would launch Trevyent in 2020. To be conservative, we have trimmed our total revenue estimates from 2018 to 2020. Without assuming additional product acquisitions, our new estimates of CRME’s total revenues suggest a CAGR of 40% from 2017 to 2020.”
Uddin thinks Cardiome will lose $0.89 a share on revenue of $32.3-million in fiscal 2018. He expects those numbers will improve to a loss of $0.50 on a topline of $44.6-million the following year.