GW Pharmaceuticals: A Hemp Stock That Is Poised to Soar
British hemp stock GW Pharmaceuticals
(NASDAQ: GWPH) has incredible growth potential for 2020 amid all the market volatility. Shares of GW Pharmaceuticals fell nearly 3% on Thursday. The stock closed at $128.13 at the end of the trading hours on June 10, 2020. Despite the stock decline yesterday, this hemp stock has performed well considering the COVID-19 led sell-off and the bear market impacting stocks in the cannabis sector. We believe this hemp stock is poised to soar this year.
In the past month, this hemp stock gained more than 17%. The year to date returns for GWPH is approximately 24%. GWPH has a market cap exceeding $ 47 billion with a price to earnings ratio of 124.10.
GW Pharma eyes huge opportunity in the US CBD market
GW Pharmaceuticals released quarterly earnings results on May 11, 2020. The total revenue for the period ending March 31, 2020, was $120.6 million – a 3x increase from $39 million in the first quarter of 2019.
The company’s earnings trends suggest that it is approaching a breakeven point. The net loss for the first quarter of 2020 was $8 million, in comparison to a net loss of $50 million for the same period one year ago. Another one of the positive indicators of this hemp stock is its ability to meet immediate and short term cash obligations. GW Pharma held a cash position of over $500 million on March 31, 2020.
A major driver of the total revenue revolved around GWPH’s cannabinoid product – Epidiolex. Epidiolex sales were above $116 million worldwide and $106 million from the United States. What is EPIDIOLEX? Epidiolex is a prescription medicine that is used to treat seizures associated with Lennox-Gastaut syndrome or Dravet syndrome in patients 2 years of age and older.
As reported in the Cannabis Business Times, the Drug Enforcement Administration decided to deschedule Epidiolex in April 2020. This move by the DEA is sure to give an additional boost to sales in the US in the upcoming quarters. The company is also addressing its growth potential in European markets with commercial launches in the UK and Germany. It now has plans to expand its commercial outreach in France, Italy, and Spain in 2020.
Why is GW Pharma a fundamentally strong hemp stock?
This cannabinoid-based pharmaceutical company has successfully navigated many of the common regulatory bottlenecks surrounding federal approvals. For instance, the company’s CBD based product – Epidiolex, received an Orphan drug designation by the US and European Union regulators. It also holds 10 patents which are valid until 2035.
These patents are part of the Orange Book listing and approved by the FDA under the Federal Food, Drug, and Cosmetic Act. GW also plans to implement a clinical testing program in the US for Multiple Sclerosis spasticity as well as the Phase 2b trial for Schizophrenia. Both these testing programs is expected to kick-off sometime in the second half of this year.
The CBD market is forecast to expand at a rapid pace and it looks like GW is at the forefront of this growth in North America and beyond. We expect more great things to come for this hemp stock in 2020.
Cannin’s GW Pharma Stock Recommendation:
GW is a biopharmaceutical company focused on discovering, developing, and commercializing novel therapeutics from its proprietary cannabinoid product platform in a broad range of disease areas.
Epidiolex sales have begun in the US, and they are booming. GW reported $296 million from Epidiolex in 2019. With European sales and Sativex coming along the company has no problems with cash flow and reports almost $540 million in cash on hand.
The Epidiolex market is two specific forms of childhood epilepsy, LGS, and Dravat’s Syndrome. There are 4,000-19,000 kids in the USA with LGS and roughly 5,000 children with Dravat’s Syndrome in the USA.
On February 11th, 2020, prior to any coronavirus outbreaks in the USA, GW was trading at $129.96. Just 1.5 months later, share prices have dropped over 40%. If there was any time to get a discounted stock, this may be it. The price to sales is 9.12, slightly higher than the pharma industry average of 7.5. Price to book is 3.91 and EV/Revenue is at 6.98. What does all this fundamental analysis mean? The stock is not currently overpriced (it was just a few months ago). We think this is an excellent buy opportunity and are excited to watch their revenue increase in 2020 with Sativex and eventually their CBDV drug in the coming years.
Recommendation: Strong
GW Pharmaceuticals: A Hemp Stock That Is Poised to Soar
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