Catalyst Pharmaceuticals is the IBD Stock Of The Day. After the biotech company reported its fourth quarter of accelerating growth, CPRX stock is approaching a breakout.
The company sells a treatment for a rare autoimmune condition called Lambert-Eaton myasthenic syndrome, or LEMS. The disease affects communication between the nerves and muscles, and saps away at muscle strength. It's closely tied to cancer. In the third quarter, Catalyst's drug, Firdapse, brought in $57.2 million in sales, rocketing more than 59%.
Catalyst also is looking to expand its pipeline through an acquisition or partnership. A deal could be close, Chief Executive Patrick McEnany said on the company's third-quarter earnings call on Nov. 10.
"Currently, we are in advanced stages of due diligence to acquire commercial-stage products and/or companies," he said. "And while no agreements have been reached to date, we are hopeful that we will be in a position to announce a transaction later this year."
CPRX Stock: Sales Growth Expected To Slow
An acquisition would be a boon for CPRX stock investors.
On a year-over-year basis, revenue growth has accelerated for eight straight quarters, including five periods in which growth was better than 20%. Also, adjusted earnings growth has accelerated for four straight quarters. In three of those quarters, growth was stronger than 50%.
But sales growth is expected to moderate. CPRX stock analysts call for 48%, 39% and 15% growth in the upcoming three quarters. Another product — or more — could certainly help Catalyst's top line.
"Our key priority on the strategy and business development front continues to remain our intention to broaden and diversify our product portfolio through collaborative partnerships (or) acquisition of commercial-stage assets or companies," McEnery said.
Highly Rated Stock On IBD 50
Despite the single-product focus, Catalyst shares have top ratings across the board from IBD Digital. Perfect Composite and Relative Strength Ratings put CPRX stock in the top 1% of all stocks in terms of 12-month performance and fundamental and technical measures.
Shares are now finding support at their 21-day moving average, though they're a bit extended from the 50-day line, MarketSmith.com shows. The former could offer some investors an early chance to test CPRX stock while waiting for the 50-day line to catch up.
Other investors could watch the base forming. CPRX stock is working on a cup-with-handle base and a buy point at 16.76.
On the stock market today, CPRX stock dipped 0.2% to close at 15.56.
Notably, CPRX stock leads the IBD 50 list of elite growth stocks. Shares are also on the Tech Leaders list.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
