It’s been a stellar week for Acorda Therapeutics (ACOR) investors. The stock skyrocketed over 60% after the company announced it is selling its manufacturing operations for Inbrija – Acorda’s FDA approved treatment of OFF episodes in Parkinson’s disease – which should also reduce its headcount by 16%.
The company’s 90,000 square-foot, FDA-inspected CGMP facility in Chelsea, Massachusetts, is being sold off to Catalent, along with the facility’s employees. The net proceeds from the deal will pocket the company approximately $70 million in cash and will reduce its annual operation costs by $40 million.
Along with a recent at-the-market offering, the sale provides enough cash for the coffers to swing the cash balance back into the green, says Cowen analyst Phil Nadeau. The analyst believes this resolves a major investor concern.
“The key risk facing ACOR investors is the ability of the company to sufficiently fund operations in order to successfully launch Inbrija and achieve cash flow breakeven without meaningful dilution,” the 5-star analyst said. “The sale of ACOR’s manufacturing operations, restructuring, and disclosure of strong Q4 Inbrija sales meaningfully increase the likelihood that Acorda’s balance sheet is sufficiently strong to support operations back to profitability, in our opinion.”
In addition to the restructuring, Acorda also offered a glimpse of Q4 financial results. Inbrija’s Q4 sales reached $9 million, considerably above the $6.5 million Nadeau had anticipated.
The developments amount to “a significant improvement in Acorda’s fundamentals,” according to Nadeau, who thinks Acorda is “undervalued for Inbrija’s L-T potential.”
To this end, Nadeau reiterates an Outperform (i.e. Buy) rating on ACOR shares, while boosting his price target from $5 all the way up to $35. The new target implies room for a whooping 422% upside potential in the next 12 months. (To watch Nadeau’s track record, click here)
Only one other analyst has recently posted an Acorda review, rating the stock a Hold. All told, the stock has a Moderate Buy consensus rating backed by a $19.50 price target. The figure takes some gloss off Nadeau’s extremely bullish call, yet still suggests room for 191% of gains over the next 12 months. (See ACOR stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.