2 Pharma Stocks Under $10 to Buy Now, Analysts Say

The brokerage firm set lofty price targets for CHMA and DERM shares

Feb 14, 2019 at 11:44 AM
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Analysts at H.C. Wainwright initiated coverage on several biopharmaceutical stocks today, including Chiasma Inc (NASDAQ:CHMA) and Dermira Inc (NASDAQ:DERM), both started at "buy." Further, the analyst issued an $11 price target for CHMA -- representing a roughly 300% premium to the equity's close of $3.70 on Wednesday. Likewise, DERM's price target was set at $13 -- nearly double the security's close of $7.24 yesterday.

Chiasma stock is up 7% at $3.82 today. Since pulling back to its 320-day moving average in late December, CHMA has surged close to 80%. However, the stock has recently struggled to overtake the $3.90-$4 area, which is where the shares landed after a massive bear gap in mid-2016, sparked by a Food and Drug Administration (FDA) rejection for the company's oral treatment for acromegaly.

Nevertheless, H.C. Wainwright is hardly the first brokerage firm with lofty expectations for CHMA. The consensus 12-month price target of $11.50 is more than triple the security's current price. Plus, both analysts following the equity offer up "buy" ratings.

Dermira stock, meanwhile, is up 4% at $7.53, at last check. It's been a rough year for DERM shares, which suffered a huge bear gap of their own in March 2018, after the company abandoned its acne drug. The stock ultimately touched a record low of $5.99 on Jan. 25, and is now facing off against its 50-day moving average.

The majority of analysts remain bullish on Dermira, which boasts three "strong buy" ratings, compared to two tepid "holds." The consensus 12-month price target of $16.75 represents a premium of nearly 130% to DERM's current perch.

However, options traders lean bearishly. Absolute volume runs light on DERM, but in the past two weeks on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 567 puts on the stock, compared to just one call. The resulting 10-day put/call volume ratio of 567 is at the top of its annual range.

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