In a research report published yesterday, Canaccord analyst Neil Maruoka upgraded shares of AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) from a Hold to a Speculative Buy rating, while reducing the price target to $0.10 (from $0.15), which represents a potential upside of 76% from where the stock is currently trading. With equity dilution overhang removed, the analyst believes that the stock price will be driven by fundamentals moving forward.
Maruoka explained, “With the substantial removal of the dilution overhang from the Series B warrants, we believe that investors should again be able to focus on upcoming clinical catalysts. As AEterna’s commercialization strategy remains in its infancy, we look to clinical milestones in the second half of next year including Phase III results from both cancer drug Zoptrex and growth hormone diagnostic Macrilen. We are therefore upgrading the stock to in anticipation of this data.”
“We value AEterna Zentaris based on a probability weighted NPV model of its most advanced therapies, using a 15% discount rate and a 45% probability of success for Zoptarelin in endometrial cancer. Following the conversion of the majority of the Series B warrants, we have re-modelled the dilution risk and are lowering our target price to US $0.10 (from US$0.15),” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Neil Maruoka has a total average return of -31.9% and a 13.7% success rate. Maruoka has a 0% average return when recommending AEZS, and is ranked #3821 out of 3832 analysts.