GlycoMimetics: Is the Thrill of Victory Worth Risking the Agony of Defeat?

GlycoMimetics Inc. (GLYC) focuses on discovering and developing biotechnological solutions via novel glycomimetic drugs for treating carbohydrate biology-based diseases. A glycomimetic molecules mimic a carbohydrate’s structure and can be designed Read More... The post GlycoMimetics: Is the Thrill of Victory Worth Risking the Agony of Defeat? appeared first on TipRanks Financial Blog.

GlycoMimetics: Is the Thrill of Victory Worth Risking the Agony of Defeat?

GlycoMimetics Inc. (GLYC) focuses on discovering and developing biotechnological solutions via novel glycomimetic drugs for treating carbohydrate biology-based diseases. A glycomimetic molecules mimic a carbohydrate’s structure and can be designed to inhibit certain disease-related carbohydrate functions. It can be therefore used to help address inflammation, infection, and even cancer.

The main value for GLYC comes from its intellectual property library and its brain trust of bright and innovative bioscience and biotechnology minds. The company has several promising innovations going through the development and testing pipeline right now. If successful, they could unlock significant value for investors at current prices. (See GlycoMimetics stock chart on TipRanks)

GLYC has a particularly promising opportunity in acute myeloid leukemia (i.e., “AML”) therapy right now. It looks highly promising after its strong showing in its Phase 2 trial. Its Phase 3 results will be released next year as the Uproleselan Phase 3 trial is currently underway.

That said, the downside risk to the company is great. If it fails to successfully gain approval for its AML therapy, its potential for generating strong shareholder returns will significantly dampen. This makes it a highly speculative stock. The company had $132.5 million in cash after Q1, which should enable it to run its R&D operations for quite some time, especially given that it only spent $15.4 million in the first quarter. However, ultimately the fate of the company rests on the outcome of its AML therapy Phase 3 trial.

Valuation Metrics

GLYC’s valuation is quite expensive, barring a positive AML therapy outcome, given that it is generating losses and bleeding cash flow right now. However, the value of the AML therapy – if it were to be successful - could cause the value of the company to increase by many multiples of its current market cap.

Ultimately the outcome for this stock is highly binary: either the Phase 3 trial is successful and shares surge higher to many multiples of their current price, or it is a failure and the company will lack any meaningful path to profitability in the near future, likely resulting in a steep selloff in its shares.

Wall Street’s Take

From Wall Street analysts, GLYC earns a Strong Buy analyst consensus based on 3 Buy ratings in the past 3 months. Additionally, the average analyst GlycoMimetics price target of $14.50 puts the upside potential at a whopping 522.3%.

Summary and Conclusions

GLYC is a highly speculative investment right now as its outcome is highly binary. If investors believe there is a strong chance that the Phase 3 trial will be successful, the stock is incredibly cheap right now. However, if the therapy ultimately proves unsuccessful, then shareholders are likely to experience significant losses.

Given that the Phase 2 results were so promising, and analysts are unanimously extremely bullish on the stock right now, it looks like GLYC could be a very attractive speculative buy that could make investors a phenomenal return on their investment. However, investors must remember that the outcome remains uncertain, and the downside potential is significant.

Disclosure: On the date of publication, Samuel Smith had no position in any of the companies discussed in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

The post GlycoMimetics: Is the Thrill of Victory Worth Risking the Agony of Defeat? appeared first on TipRanks Financial Blog.

Source : Tip Ranks More   

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NIO: Great Business, But Valuation Is Sky-High

NIO Inc. (NIO) designs and manufactures high-tech electric vehicles in China. As a major player and innovator in connectivity, autonomous driving, and artificial intelligence technologies, it competes directly with Tesla Read More... The post NIO: Great Business, But Valuation Is Sky-High appeared first on TipRanks Financial Blog.

NIO: Great Business, But Valuation Is Sky-High

NIO Inc. (NIO) designs and manufactures high-tech electric vehicles in China. As a major player and innovator in connectivity, autonomous driving, and artificial intelligence technologies, it competes directly with Tesla (TSLA).

The main value for NIO comes from its competitive positioning in the luxury electric vehicle market (especially SUVs) in China, stemming from its comparable technology combined with its cheaper price point.

Furthermore, as a leading local manufacturer and innovator in high-priority cutting edge technology fields, the Chinese government has a vested interest in NIO’s continued growth and success. This should not only lead to continued financial support through difficult times, but may also lead to the government-controlled media stirring up popular opinion against its main competitors, as it has done with TSLA recently. (See Nio stock chart on TipRanks)

The company is expected to continue generating strong growth on the back of the re-opening of the global economy following the COVID-19 outbreak, as well as the continued robust growth of the Chinese middle class. Moreover, as its advanced automotive technologies continue to emerge and take a greater share of the overall global automobile market, demand for its products and technologies should grow.

That said, the company also has numerous challenges with which to contend. First and foremost, it already faces significant competition from larger companies, such as TSLA, that possess powerful innovative capabilities and strong brand images. Additionally, as a Chinese company, it faces significant political risk (as Alibaba (BABA) recently learned the hard way), accounting risk, and execution risk. The latter risk is due to the fact that it is still a smaller scale business that has to deliver on aggressive growth expectations.

Valuation Metrics

Despite these challenges, NIO still possesses a strong position in the space, giving it a significant edge to leverage in terms of industry-specific consumer data and network. However, its valuation remains elevated. The forward price to cash flow is a whopping 95.6x, and the company is not profitable yet on a GAAP basis, while simultaneously bleeding cash.

The good news is that revenue is expected to triple over the next two years and the business should finally be profitable on an EBITDA basis in 2022, though the EBITDA margin will still likely be razor thin at just 2.3%.

Between its backing from the Chinese government and its $47.2B cash and short-term investments stockpile, it should have the financial backing it needs to fund its ambitious ventures and reach profitability within a few years. However, it remains highly speculative given that it must deliver on massive growth expectations in a short period of time, against significant challenges.

Wall Street’s Take

From Wall Street analysts, NIO earns a Strong Buy analyst consensus based on 8 Buy ratings in the past 3 months. Additionally, the average analyst Nio price target of $61.91 puts the upside potential at 31.98%.

Summary and Conclusions

NIO is a highly speculative investment right now, as it has a very elevated valuation. Therefore, it must deliver on sky-high expectations in the face of numerous risks in order to deliver long-term investors a respectable return.

That said, it still has a lot going for it. Nio is strengthened by its status as a domestic leader in high-priority cutting edge technologies and a high visibility global industry. The Chinese government is likely to continue assisting the company directly and indirectly moving forward, and the strong tailwind from China’s growing middle class should also boost Nio significantly.

Overall, the business is likely to continue growing and analysts remain bullish on the shares here. That said, given its lofty valuation and steep climb to achieve profitability in the face of top-tier competition from the likes of TSLA, the stock remains a risky bet. Investors might be prudent to take that into account before establishing a position.

Disclosure: On the date of publication, Samuel Smith had no position in any of the companies discussed in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

The post NIO: Great Business, But Valuation Is Sky-High appeared first on TipRanks Financial Blog.

Source : Tip Ranks More   

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