Discovery Labs shares up on rosy analyst forecast
NEW YORK (AP) — Shares of Discovery Laboratories Inc. rose in morning trading Friday after an analyst said the company could come to "dominate" the market for respiratory distress syndrome treatments, and said its shares could double over the next year.
THE SPARK: Stifel Nicolaus analyst Joel Sendek began covering shares of the biotechnology company with a "Buy" rating and a price target of $5 per share. Sendek expects strong sales of the company's Afectair ventilator device and its drug Surfaxin, as well as future versions of Surfaxin. He said total sales of the products could reach about $120 million in 2018, a majority in a market that he believes will be worth about $200 million.
THE BIG PICTURE: Afectair and Surfaxin were both approved early this year, and the Warrington, Pa., company plans to start marketing both during the fourth quarter. Both are treatments for respiratory distress syndrome. RDS is a condition in which children are born without enough pulmonary surfactant, a substance produced by the lungs that is essential for breathing.
THE ANALYSIS: Sendek said the company's next-generation treatments are also promising. Those include an aerosol version of Surfaxin. In 2018, the analyst expects the company to report $101 million in revenue from versions of Surfaxin and another $20 million from Afectair.
SHARE ACTION: Shares of Discovery Labs rose 11 cents, or 4.4percent, to $2.62. The stock has traded between $1.44 and $5.39 in the past 52 weeks.