Morgan Stanley Provides Scenario Analysis of GW Pharmaceuticals PLC- ADR (GWPH) Epidiolex Trial
What does the future hold for GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH)? Morgan Stanley analyst Andrew Berens weighs in on the cannabinoid maker, providing investors a summary of the potential outcomes from GWPH’s second phase 3 study for the treatment of Lennox-Gastaut syndrome.
Berens wrote, “We see five potential outcomes, with resulting stock reactions ranging from +25% in a best-case scenario to -50% in an unlikely worst-case scenario. We believe the most likely outcome is Epidiolex demonstrating similar efficacy and placebo rates as what was seen in the first LGS study, and for shares to react positively given the incrementally positive data and continuing de-risking of the program. Importantly, we note that perception of strategic optionality following a Sept 7 Reuters story (available here) may impact share reaction following the data release, potentially fueling exaggerated movements in the scenarios given the perceived impact on optionality, factors that we consider in our analysis. Our scenario analysis suggests fair value of $~112 into the data release, slightly higher than current share prices.”
As such, Berens reiterated an Overweight rating on GWPH stock, with a price target of $152, which represents a potential upside of 41% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Andrew Berens has a yearly average return of 9.3% and a 67% success rate. Berens has a 12.5% average return when recommending GWPH, and is ranked #479 out of 4189 analysts.
Out of the 7 analysts polled by TipRanks, 6 rate GWPH stock a Buy, while 1 rates the stock a Sell. With a return potential of 20%, the stock’s consensus target price stands at $129.67.