Cerevel Therapeutics (NASDAQ:CERE), a
Pfizer (NYSE:PFE) spinoff and pharmaceutical maker, blasted upward as much as 136.2% in yesterday's trading. The company lost some of that momentum going into this morning's trading, however, likely a consequence of profit taking after such a massive upswing. The company, which traded on as much as nearly 240 times normal volume yesterday, delivered great news following Phase 1 testing of its new
anti-schizophrenia drug. Financial analysts, meanwhile, have been bullish for most of this year so far when it comes to Cerevel, and sentiment is only improving so far.
Cerevel's Potential New Blockbuster Schizophrenia Treatment
Right now, Cerevel Therapeutics doesn't actually have any products on the market. It was spun off from Pfizer roughly three years ago. However, that may be changing in the not-too-distant future as its latest lead candidate, CVL-231, cleared Phase 1 testing in grand fashion. CVL-231 is designed to modify activity in the M4 muscarinic receptor, a move which, if it ultimately works, will help treat schizophrenia without many of the common side effects from current treatment options.
Reports note that the tests, which were intended to find safe dosage levels, showed significant improvement of schizophrenia at both 20 milligram and 30 milligram doses. For the 20 milligram test group, the positive and negative syndrome scale, PANSS, saw scores drop 17.9 points against a 6.8 point score on a placebo, a drop of 11.1 points. Meanwhile, for the 30 milligram test group, scores dropped 19.5 points lower, which meant the drug is more effective at higher concentrations. Better yet, the drug was considered well-tolerated by its recipients, which only helps improve the drug's overall value.
Should CVL-231 ultimately make it to market, it will not only be good news for Cerevel, but for Pfizer as well. Pfizer is in line to receive milestone payments for such a development, as well as tiered royalty payments, which will give Pfizer a piece of what so far looks to be a highly effective antipsychotic drug. However, it's worth pointing out that Cerevel was also the subject of intense put option buying in trading yesterday, with 28,564 such options purchased. The normal volume of put option buying for Cerevel is 21, which means put options were up 135,919% over normal yesterday.
What Are Financial Analysts Saying About Cerevel Stock?
While Cerevel's profitability is limited right now, its ability to turn around in the long term is being actively considered by financial analysts, who increasingly like what they see at the drugmaker. The current consensus recommendation is “buy”, and that's been the case since late last year when coverage on Cerevel largely started.
Six months ago, there were three “buy” recommendations and one “hold” on Cerevel. That held throughout this year, until earlier this month, when a fourth “buy” recommendation joined the field, leaving us with four “buy” and one “hold.”
Cerevel stock price targets, meanwhile, conform to a very narrow range. The current average price target for Cerevel stock is $21.50, with a high target of $27 and a low of $17. The low was established back in November 2020 by Stifel Nicolaus, back when it initiated coverage on the company. With the company seen trading around $26 in trading so far today, some downside risk is present as the company is trading near the top of the price target range.
Recent activity for the company has been highly positive. Since November 2020, four companies have initiated coverage on Cerevel along with Stifel Nicolaus: Morgan Stanley, Goldman Sachs, and Jefferies Financial Group. All four have initiated coverage at a “buy”, or “overweight” in Morgan Stanley's case. Only one negative action has emerged in that time, as Sidoti downgraded the stock to a “hold”, the only such hold in the roster.
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