TherapeuticsMD (TXMD): A Textbook Case of Buy the Rumor, Sell the News?

It's hard to make money when FDA approvals are priced in, but Cantor analyst remains bullish.


TherapeuticsMD (NASDAQ:TXMD) got its dyspareunia treatment Imvexxy (fka TX-004) approved by the Food and Drug Administration today. Shares are down 6% as of this writing.

Why? The approval was no surprise. The data was solid. Even an early approval wasn’t all that surprising, especially after the company prematurely published marketing website for Imvexxy falsely touted the therapy as approved and prepped for sale. Biotech expert Adam Feuerstein also recently tweeted, “This me-too product (entering a market with cheaper generics) was previously known as Yuvvexy, so real innovation from the Boca Raton-based company.”

That said, with the binary event out of the way, investors probably did decide to abide by the old investing maxim of “buy the rumor, sell the news.” It certainly had to be tempting to take profits after TherapeuticsMD stock jumped so much so quickly.

However, Cantor analyst William Tanner remains bullish, reiterating an Overweight rating on TXMD stock, with a price target of $26, which implies an upside of 324% from current levels. (To watch Tanner’s track record, click here)

Tanner commented, “We believe the event should increase investor confidence that the management team can successfully develop drug products. We believe investors should also view TX-001 as being incrementally de-risked. Robust commercial potential appears to be supported by important elements such as the attractiveness of the VVA market (est. ~7% of the TAM penetrated), differentiation of the product (low doses with no systemic exposure), awareness (to build with product availability) and access (a payer unregulated class). Notwithstanding the loan agreement, for the stock to perform better, we believe management needs to convince the market that a capital raise is unlikely over the nearer term. TXMD will host an analyst and investor event on Monday, June 4, in NYC, at which additional commercialization plans are expected to be provided.”

Out of the 9 analysts polled in the past 12 months, 8 rate TherapeuticsMD stock a Buy, while 1 rates the stock a Hold. With a return potential of 130%, the stock’s consensus target price stands at $14.13.

 

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