Why Galmed Pharmaceuticals (GLMD) Is a $59 Stock


Galmed Pharmaceuticals (NASDAQ:GLMD) shares are soaring nearly 20% in after-hours trading Wednesday, as the drug maker gets a vote of confidence from Cantor analyst Elemer Piros. The analyst initiates coverage on the stock with an Overweight rating and price target of $59, which implies a huge upside of 460% from current levels.

As usual, we recommend taking analyst notes with a grain of salt. They are often successful in moving the stock price, but you always need to take things into perspective. According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, Piros has a yearly average return of -3.7% and a 50% success rate. Piros is ranked #4549 out of 4838 analysts.

Piros wrote, “We believe that, by 4Q19, only three meaningful NASH pivotal programs will be in development: Allergan’s cenicriviroc, Madrigal’s MGL-3196, and Galmed’s Aramchol. Of the three drugs, we believe Galmed’s has the highest likelihood of achieving improvements on both endpoints (NASH resolution without worsening of fibrosis, and improvement in fibrosis score without worsening of NASH). We believe that Galmed, with a market cap of $230 million, is undervalued in relation to its peers in the NASH space, namely Madrigal ($4.5 billion), Genfit ($765 million), and Intercept ($2.8 billion).”

“Based on the safety and efficacy profile of the Phase 2b ARREST study, we estimate a 60% probability of Aramchol succeeding in NASH. Our probability-adjusted NPV (15% discount rate) of future cash flows for NASH of $1.2 billion ($55/share) plus estimated YE19 cash of $85 million ($4/share), leads us to our 12-month price target of $59,” the analyst added.

Most analysts on Wall Streets are out rooting for this biotech player to be a winning stock pick, as TipRanks analytics showcase GLMD as a Strong Buy. Based on 5 analysts polled in the last 12 months, all 5 are bullish on Galmed stock. With a solid return potential of nearly 290%, the stock’s consensus target price stands at $41.

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