Our Stock of the Week is Harmony Biosciences Holding (HRMY). HRMY is a commercial-stage pharmaceutical company focused on developing and commercializing drugs for neurological disorder therapies. The company obtained approval for WAKIX in August 2019, which is designed to increase histamine levels that provide signals to the brain. This medication is approved for excessive daytime sleepiness (also known as EDS). This is a substantial market of over $2 billion.
The company has seen steady sales growth; its most recent quarter revenues jumped 45% to $107 million over the prior year. Earnings per share were $0.57 versus $0.37 last year. HRMY is expected to earn $1.33 in 2022 and increase that 112% to $2.82 next year.
On October 14, Jefferies upgraded HRMY to Buy from Hold with a price target of $61, up from $57. With an estimated 34% annualized revenue growth rate, the company is “the highest among biotech stocks with positive net income. Jeffries sees “no slowing down” of Wakix’s sales on an annualized basis and thinks it deserves a higher premium for its growth. In addition Jeffries believes HRMY is “quickly filling the piggy bank and looking for somewhere to put it” and that it is not hard to imagine an accretive acquisition at current valuations.
Technically, the stock has enjoyed good relative strength, has recently moved up over the downtrend line, and is forming a new area of consolidation. We are looking for a push to challenge recent highs if market conditions remain positive.
As always, we would not chase the stock at the open on Monday but will look to trade it aggressively into volatility.
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 no positions in HRMY 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.
