Cassava (SAVA) shares have put in a good rally since hitting a yearly low in late July, with the stock almost doubling during the period. However, the surge is a bit of a head scratcher to B. Riley’s Mayank Mamtani who finds no real evidence to support the uptick.
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Cassava does boast meme stock credentials so that might offer an explanation. In any case, given the company provided little information to bolster the near-term bull-case in its recent Q3 business update, Mamtani thinks it’s time to review his outlook for the company.
“While staying encouraged by SAVA’s steady pace of expanding patient enrollment in its ongoing Ph. III mild-to-moderate Alzheimer’s Disease (AD) REFOCUS-ALZ and RETHINK-ALZ trials, our thesis is adversely impacted by limited relevant data disclosures by the company from the ongoing Ph. II open-label (OL) study,” Mamtani said.
Mamtani notes that the Q2 earnings call did include an update which actually showed that the 100-patient dataset was not as good as the first 50-patient dataset while the company said a full analysis of 200-patients should be available before the end of the year. However, he finds the whole methodology of reporting progress not to be of much use. “In fact,” he adds, “we view this ‘rinse and repeat’ of prior analyses, unless accompanied by additional biomarker and safety analyses, to contribute minimally to incremental de-risking of simufilam’s ongoing Ph. III trial.”
And this makes the “risk/reward profile” at present levels “more balanced.” Add in the distraction provided by the company’s recently filed defamation lawsuit against “certain individuals” Cassava claims have been running a “short and distort” campaign against the company over alleged misuse of data, and Mamtani thinks it’s time to move to the sidelines.
Thus, the analyst downgraded SAVA stock from Buy to Neutral, although the $44 price target stays as is and could reward investors with returns of ~38% in a year’s time. (To watch Mamtani’s track record, click here)
Overall, 4 analysts have been tracking SAVA’s progress recently and these break down into 2 Buys, and 1 Hold and Sell, each, making the consensus view a Moderate Buy. Regarding where the share price is heading, the outlook is more positive; at $70, the average target implies shares will surge 119% over the coming year. (See Cassava stock forecast 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.
