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Is It Too Late to Buy Biohaven Stock? Insight After a Major Surge

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

Recent news surrounding Biohaven Ltd. has highlighted significant developments likely to influence stock price movements. Key among them is the anticipation of new drug approvals and a promising strategic partnership with a top pharmaceutical company. Consequently, Biohaven Ltd.’s stocks have surged, trading up by 9.3 percent on Wednesday.

Surge in Biohaven Stock Following Positive Study Results for Troriluzole

  • Troriluzole in spinocerebellar ataxia study showed significant and sustained benefits which might lead to an NDA submission in Q4 2024.
  • Analysts raised price targets with RBC Capital increasing from $59 to $68, claiming positive outcomes open multiple opportunities for upswing.
  • Biohaven’s stock leapt 12.6%, up to $45.48 fuelled by optimistic market sentiments regarding its pivotal study results for treating spinocerebellar ataxia.
  • The firm hit endpoints in their spinocerebellar ataxia study which caused a 19% stock jump, reaching $48 per share.
  • Piper Sandler projects a U.S. revenue of $250M by 2030 due to the promising results of their troriluzole treatment data.

Candlestick Chart

Live Update at 16:02:09 EST: On Wednesday, September 25, 2024 Biohaven Ltd. stock [NYSE: BHVN] is trending up by 9.3%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Overview of Recent Financial Performance

Examining Biohaven’s recent earnings, the numbers tell quite a story. In the most recent quarter ending on Jun 30, 2024, the company recorded a net income loss of $319.77M. This might sound like a huge hit, but it’s a part of the normal ebb and flow of investment in biotech firms. Expenses were totaling $333.77M with significant costs coming from R&D. It’s always the case with high-growth-potential companies where initial expenses are high due to research and development phases.

Despite the income statement displaying heavy losses, the balance sheet paints a steadier picture. They have total assets worth $582.64M and equity holding strong at $383.74M. Not to be overlooked, Biohaven’s liquidity ratios are healthy, with a current ratio at 3.3 and quick ratio standing at 2.9.

The cash flow statement shows movements that reflect a company investing heavily in its future. While operating cash flow was negative at $167.8M, financing activities brought in a positive flow of $321.12M, thanks to common stock issuance. This financing activity will help sustain Biohaven’s ambitious plans and ongoing developments.

More Breaking News

Major Study Results: Leveraging Breakthroughs in Spinocerebellar Ataxia

The study results for troriluzole in treating spinocerebellar ataxia (SCA) have been nothing short of groundbreaking. The recent announcement of achieving the primary endpoint with strong statistical significance across all genotypes has created a buzz. This is not just another milestone; it signifies a crucial step towards possibly changing the treatment landscape for patients suffering from this debilitating disorder. The expectation is to submit a New Drug Application (NDA) by Q4 2024 aiming for commercialization by 2025. This timeline, aggressive as it may sound, brings hope and potential high revenue streams.

The stock reacted sharply, rising over 16% in premarket trading right after the news broke. It’s fascinating to see how swiftly investor sentiments can change with novel developments. Analysts such as Piper Sandler raising their price target from $66 to $76 reflects the newfound confidence in Biohaven’s long-term potential. They even foresee U.S. revenues touching the $250M mark by 2030 solely from this treatment, painting a potentially lucrative future for the company’s stock.

RBC Capital also echoed similar sentiments, raising their target from $59 to $68. They highlighted multiple upside opportunities tied directly to troriluzole’s promising results and potential NDA filing. This just goes to show that belief in Biohaven isn’t fleeting; it’s now well-rooted in data.

Analysts’ Perspective: Confidence in Biohaven’s Growth

The reaction wasn’t limited to investors. Analysts at various top-tier firms re-evaluated their positions on Biohaven. BofA considerably raised its price target to $62, reiterating a ‘Buy’ rating. This reflects strengthened confidence in Biohaven’s ability to navigate through market volatility.

Leerink forecasted a similar upward adjustment, taking Biohaven’s target to $60 from $55. The driving reason being the calculated 30% odds of success for FDA approval of troriluzole. This is no small figure when you consider that every percentage point in probability drastically affects potential investment returns.

Furthermore, Bernstein not only bumped the price target to $66 but cited the overturning investor skepticism as the stock surged 14% post-announcement. It’s evident that the perception of risk vs. reward has drastically shifted in favor of Biohaven.

Even Jefferies’ initiated coverage around the same time with a ‘Buy’ rating. When you collate all these perspectives, it’s clear there is a consensus among experts about the viability and attractiveness of Biohaven as an investment option.

Stock Performance Analysis: The Bigger Picture

Looking at Biohaven’s recent price data, the uptick in stock value correlates highly with the positive pivotal study results. The stock moved from around $38 levels to hover near $49 post-announcement. This sharp climb illustrates renewed investor enthusiasm and market approval.

Key ratios underline the intrinsic value amidst ambitious growth ventures. A current ratio of 3.3 and a quick ratio of 2.9 signal robust short-term financial health. On another front, the enterprise value stands at $3.85B, indicating that market valuation has factored in significant growth prospects.

Biohaven’s long-term debt to equity of 0.07 showcases prudent financial management with minimal leverage, giving them room to maneuver and continue their R&D investments. Despite astronomical R&D costs – $314.82M for Q2 alone – it’s this very expenditure that promises a much greater payoff. Profit margins currently in the negative zone are expected to turn positive as successful treatments hit the market.

Actionable Insights and Conclusion

The bio-pharmaceutical landscape is competitive and fast-paced. For Biohaven, recent triumphs in the pivotal study have redefined market expectations. Investors and analysts alike view the troriluzole study results as a pivotal turning point for the company’s future trajectory. As a savvy investor, whether you add Biohaven to your portfolio hinges on your risk appetite and belief in Biohaven’s clinical trial maturations.

In the world of biotechnology, bold moves often lead to groundbreaking innovations and equally groundbreaking returns. Biohaven’s story is being rewritten by robust clinical data, promising financial stability, and bullish market sentiments. Time will test these insights, but the current horizon looks promising for Biohaven enthusiasts.

For an investor, the question “Is It Too Late to Buy Biohaven Stock?” might find an answer rooted in cautious optimism. There are windfalls to be reaped, but the field of biotechnology always carries inherent risks which must be weighed carefully.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”