AcelRx Pharmaceuticals Inc (NASDAQ:ACRX) investors are getting enthusiastic again after the biotech firm’s Phase 3 IAP312 clinical trial of Zalviso, approved in the EU to treat moderate-to-severe acute pain in a hospital setting, had initially sent the stock on a close to 14% dive.
However, shares were rising almost 5% on Friday, and H.C. Wainwright Ed Arce sizes up this “unusually high” volatility throughout the past three weeks as ideal for a bullish AcelRx investor, for the “Irrational market provides excellent entry point, in our view.”
As such, the analyst reiterates a Buy rating on ACRX with a $7 price target, which represents a 141% increase from where the shares last closed. (To watch Arce’s track record, click here.)
Initially, shares had been surging ahead of the positive Zalviso trial amid lofty anticipation. Volatility hinges upon wary market sentiment circling the “opioid crisis” that some believe could prevent the FDA from giving the drug the green light due to drug accountability apprehensions. However, with the device error rate outperforming expectation, Arce anticipates better patient training as well as nurse inspection protocols will satisfy the FDA’s unease.
On the heels of the Phase III data read-out, Arce underscores, “[…] we believe many of the same momentum players that drove the share price up then liquidated their positions, taking their profits and driving the shares back down to close yesterday at $2.78 (-28.7% vs. NBI -1.4%). From our perspective, the current market’s myopic view of the investment opportunity in ACRX stands in stark contrast to the growing fundamental value of the shares (even under conservative commercial projections), especially given several near-term value-inflection milestones. Critically, we believe ACRX continues to trade substantially undervalued due to a misplaced association, attributed by many investors, to the ‘opioid crisis’ in the U.S. We believe this unfair taint on the company significantly discounts the shares as it ignores the core profile of both Dsuvia and Zalviso as acute, short-term analgesics provided only in medically-supervised settings (and with Dsuvia, administered only by a healthcare professional.”
TipRanks analytics demonstrate ACRX as a Buy. Out of 5 analysts polled by TipRanks in the last 3 months, 3 are bullish on AcelRX stock while 2 remain sidelined. With a return potential of 154%, the stock’s consensus target price stands at $7.38.