Stock of the day 05/08/2015 – GW Pharmaceuticals PLC

Whilst GlaxoSmithKline and AstraZeneca have spent the last few months tumbling, GW Pharmaceuticals has been hitting new highs (no pun intended).

The company announces its third quarter results on Thursday.

After opening the year at £3.69 GW Pharmaceuticals has only now just begin to see any kind of sustained decline. Near 20% jumps in the middle of March and April did most of the grunt work in lifting the stock, whilst more gradual gains across May and June took GW to an all-time high of £7.08 by the year’s half way point. Since then, however, the stock hasn’t been able to maintain this growth, and spent the second half of July in the red. GW Pharmaceuticals has a current trading price of £5.99 (IT-Finance.com, 05/08/2015).


(Source: IT-Finance.com 05/08/2015)

Similarly its US stock listing has risen from $68.31 at the start of 2015 to high of $133.87 at the end of June; it has a current trading price of $112.60 (IT-Finance.com, 05/08/2015).


(Source: IT-Finance.com 05/08/2015)

The company’s half year results back in May had a few issues; revenue slipped to £14.3 million from £15 million largely due to increased R&D expenditure, from £21 million to £30.5 million. Overall this led GW Pharmaceuticals to post a widening pre-tax loss, from £10.6 million to £13.7 million year-on-year. However, these financial issues were swallowed by investors with little disruption to GW’s ascendance because of the increasing strength of its drugs pipeline.

The main star of that second quarter reports was Epidiolex. The company announced that the cannabis-based product was about to enter phase 3 trials for its treatment of Dravet syndrome and Lennox-Gastaut syndrome, as well as the fact it had been awarded a Notice of Allowance issued by the US Patent and Trademark Office.

In terms of its upcoming third quarter announcement, analysts are expecting a widening of losses, from $0.66 to $1.16 per share, alongside a slip in revenue, from $13.02 million to $12.86 million. However, these headline figures are likely not to matter as much to investors as the company’s pipeline updates, especially comments on Epidolex’s phase 3 trials. Also important will be the progress of tests to see whether its multiple sclerosis drug Sativex (the first natural cannabis plant derivate to gain full market approval ever) can be used to treat pain associated with cancer, something it ran into problems with back in January.

GW Pharmaceuticals has a consensus rating of ‘Buy’ with an average target price of $137.59 (for its US listing).