Our Stock of the Week is Catalyst Pharmaceuticals (CPRX). This is a repeat from three weeks ago, but it remains one of the best charts in the market. CPRX is a commercial-stage biopharma focused on medicines for rare diseases. In July, the stock just sharply higher when Catalyst announced that it settled patent infringement litigation for a Ruzurgi to treat LEMS in pediatric patients.
CPRX revenues increased 59% in the third quarter, and eps increased 86% to $0.26. It is currently estimated that eps will grow an additional 21% in 2023.
The company has a strong balance sheet and over $250 million, or $2.40 per share, in cash which could be used for an acquisition.
Following its third-quarter report, both Wainwright and Piper reiterated their buy ratings on the stock and set a target price of $18.
This is one of the highest-ranked stocks in the IBD CANSLIM system, with an EPS ranking of 99. Relative Strength of 99, Group Strength of A, and Accumulation rating of A-. Stocks favored by IBD often produce good momentum when they make breakout moves
Technically, the stock is a good example of the box system that was used by Nicolas Darvas, which is the historical basis for CANSLIM. The key is to allow the stock to build a series of higher trading ranges and buy as it moves to the next level.
As always, we would not chase strength to start the week but will look to aggressively trade the stock as it develops.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and will buy or sell at any time for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in CPRX. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
