I am neutral on PMV Pharma (PMVP) as – while the one Wall Street analyst that covers it is bullish on it and his price target indicates strong upside potential over the next year – the business is highly speculative and is unlikely to become profitable anytime soon.
PMV Pharma was founded in 2013 and has its headquarters in New Jersey, United States. The company’s primary target is the treatment of cancer through first-class p53 regulators’ development. The precision oncology company discovers and develops small molecule tumor-agnostic therapies that target such regulators. Its focus on p53 regulators has proven relatively successful, as this is the most commonly mutated gene in cancer, which is present in approximately 50% of all human tumors. The company focuses on introducing disruptive techniques through research and development to treat the symptoms of cancer.
Strengths
PMV Pharma’s focus on p53 regulators has helped the company expand its research and development fields, thus attracting a larger pool of clients, investors, and partners in the industry. The company has also incorporated new technologies, which has helped the company streamline its processes for rapid growth and expansion. This has also given the company greater flexibility, which allows it the freedom to scale up or down, depending on the internal and external circumstances.
Additionally, the company’s compelling work environment, competitive salary packages, and advantages make it a draw for a highly-skilled and competent workforce.
Recent Results
In the quarterly period that ended in September 2021, PMV Pharmaceuticals had operating expenses totaling $15,097,000. Consequently, the net loss for the quarter totaled $(15,011,000). The basic and diluted net loss per share for the quarter was $(0.33). In 2020’s quarterly results for the same period, the basic and diluted net loss per share was $(1.46).
The weighted average common shares outstanding totaled 6,022,457 in Q3 2020 and 45,295,232 in Q3 2021.The end of period cash and cash equivalents have dropped significantly: they were $177,463,000 at the end of nine months, whereas in the previous year, they totaled $373,150,000 after nine months.
Valuation Metrics
PMVP stock is very difficult to value, given that it has generated highly inconsistent results throughout its history. It is currently not profitable and is not expected to generate any revenue for several years.
The stock has dropped 57.2% over the past year. Furthermore, its earnings fell sequentially in the past two quarters.
Wall Street’s Take
According to Wall Street analysts, PMVP earns a Moderate Buy analyst consensus based on one Buy rating, zero Hold ratings, and zero Sell ratings in the past 3 months. Additionally, the average PMVP price target of $63.00 puts the upside potential at 268.64%.
Summary and Conclusions
PMVP stock has support from the one Wall Street analyst that covers it. He gives it a price target that implies massive upside potential over the next year. The company also operates in an industry where, if it can succeed in developing drugs to treat cancer, investors can make a lot of cash.
That said, at this point the company is not even generating revenue, much less profits, so it is incredibly speculative.
As a result, while the current stock price could provide an opportunistic entry point over the long term if the company ends up being successful, investors should remember that the company remains highly speculative and therefore might want to size any position accordingly.
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