Why Did H.C. Wainwright Downgrade Acorda Therapeutics’ Stock?

In a report released today, Ram Selvaraju from H.C. Wainwright downgraded Acorda Therapeutics (ACORResearch Report) to Hold, with a price target of $6. The company’s shares closed last Monday at $2.73, close to its 52-week low of $2.61.

Selvaraju observed:

“Valuation methodology, risks, and uncertainties. We currently ascribe about $300M to AMPYRA and $400M to INBRIJA on a risk-adjusted net present value (rNPV) basis, using a 15% discount rate for INBRIJA along with a 20% discount rate for AMPYRA. This translates into a price per share of $6, assuming roughly 118M shares outstanding as of mid-2020. Our 12- month projected share count assumes issuance of 70M shares in total to provide sufficient funds to address the convertible debt maturity in 2021 and provide the resources necessary to continue investing in the INBRIJA launch.”

According to TipRanks.com, Selvaraju ‘s ranking currently consits of no stars on a 0-5 ranking scale, with an average return of -10.7% and a 27.0% success rate. Selvaraju covers the Healthcare sector, focusing on stocks such as Taro Pharmaceutical Industries Ltd., Biospecifics Technologies Corp, and Stealth Biotherapeutics Corp.

Currently, the analyst consensus on Acorda Therapeutics is a Hold with an average price target of $12.40, a 336.6% upside from current levels. In a report issued on August 2, J.P. Morgan also maintained a Hold rating on the stock with a $7 price target.

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Based on Acorda Therapeutics’ latest earnings release for the quarter ending June 30, the company reported a quarterly GAAP net loss of $27.49 million. In comparison, last year the company had a net profit of $46.2 million.

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Acorda Therapeutics, Inc. engages in the development of therapies that restore function and improve the lives of people with neurological disorders. Its two main products are Ampyra and Zanaflex Capsules.