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S&P 500   4,026.12
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THE BEST BLACK FRIDAY DEAL YET (Ad)
Sober or bright? Europe faces holidays during energy crunch
Biden eases Venezuela sanctions as opposition talks resume
See how to make money instead of spending it on Black Friday with this offer (Ad)
Whole Foods decision to pull lobster divides enviros, pols
Airbnb has a plan to fix cleaning fees
See how to make money instead of spending it on Black Friday with this offer (Ad)
Saudi viewers angry over apparent ban on World Cup streaming
Cuba's informal market finds new space on growing internet
S&P 500   4,026.12
DOW   34,347.03
QQQ   286.92
Considerations When Rolling Over a 401(k) into a Roth IRA
THE BEST BLACK FRIDAY DEAL YET (Ad)
Sober or bright? Europe faces holidays during energy crunch
Biden eases Venezuela sanctions as opposition talks resume
See how to make money instead of spending it on Black Friday with this offer (Ad)
Whole Foods decision to pull lobster divides enviros, pols
Airbnb has a plan to fix cleaning fees
See how to make money instead of spending it on Black Friday with this offer (Ad)
Saudi viewers angry over apparent ban on World Cup streaming
Cuba's informal market finds new space on growing internet
S&P 500   4,026.12
DOW   34,347.03
QQQ   286.92
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THE BEST BLACK FRIDAY DEAL YET (Ad)
Sober or bright? Europe faces holidays during energy crunch
Biden eases Venezuela sanctions as opposition talks resume
See how to make money instead of spending it on Black Friday with this offer (Ad)
Whole Foods decision to pull lobster divides enviros, pols
Airbnb has a plan to fix cleaning fees
See how to make money instead of spending it on Black Friday with this offer (Ad)
Saudi viewers angry over apparent ban on World Cup streaming
Cuba's informal market finds new space on growing internet

Small-Cap Catalyst Pharma Is Among Market's Best Price Performers

Key Points

  • Small-cap biotech Catalyst Pharmaceuticals recently joined the S&P 600 index, which means institutions must own shares to track the index 
  • The company has a steady history of price appreciation going back one year, even while the broad market declined
  • Catalyst has been outpacing the S&P 600 index by a wide margin
  • The company's earnings and revenue growth accelerated in the past three quarters, and analysts see double-digit top- and bottom-line growth ahead 
Small-Cap Catalyst Pharma Is Among Markets Best Price PerformersSmall-cap biotech Catalyst Pharmaceuticals (NASDAQ: CPRX) has been outperforming the broader market, amid recent earnings and revenue acceleration.

The company also got some good news last month, as it joined the S&P 600 Small-Cap index, replacing defense contractor ManTech, which was acquired by private equity giant The Carlyle Group (NASDAQ: CG)

Joining a major index, such as the S&P 600, means funds tracking that index must purchase shares and maintain weightings roughly in line with the benchmark’s composition. 

This means Catalyst, makes amifampridine, a medication for a rare autoimmune condition called Lambert-Eaton myasthenic syndrome. This affects the neuromuscular and neurological systems. This condition can be associated with lung cancer patients, but also occurs in those without cancer. 

Catalyst has a market capitalization of $1.35 billion. The company went public in 2006, so is somewhat out of the 15-year post-IPO zone, when companies often notch their biggest price gains. However, the stock has posted significant increases recently:

  • 1 week: +8.09%
  • 1 month:-5.24%
  • 3 month: +83.02%
  • Year-to-date: +89.51%
  • 1 year: +142.08%

Shares rallied to an all-time high of $17.22 on September 13, on news of the index inclusion. But as the small-cap index, along with the broader market fell, Catalyst got swept up in the downtrend.

Nonetheless, it’s instructive to compare the stock’s performance against its index. You can track the S&P 600 by a number of ETFs, such as the SPDR Portfolio S&P 600 Small Cap ETF (NYSEARCA: SPSM)


The index is down 24.71% year-to-date, and also in shorter rolling time frames. Small caps underperformed Monday as large caps posted solid rallies. Catalyst bucked that trend, with a gain of 2.42%, or $0.31, finishing the session at $13.14. Trading volume was below normal.

Here’s one thing to watch for with a small stock like this: If you look at a one-minute chart, you’ll see gaps between price movements. That’s because with 87.4 million shares in float, and with 14% of shares owned by management, there aren’t really too many buyers and sellers. Sometimes that means it can take a minute (literally) to find an agreement on a price.

Despite that potential drawback, which actually doesn’t affect retail investors much at all, the company has plenty of positives: Revenue growth accelerated in the past three quarters, from 23% to 46%. 

Its three-year revenue growth rate is 36%. 

The three-year earnings growth rate is 54%. Earnings growth also accelerated in the past three quarters, from 17% to 75%.

The company reports its third quarter on November 8, with analysts eyeing earnings of $0.19 per share on revenue of $53.35 million. Those would be increases of 36% and 48%, respectively. 

MarketBeat earnings data show that Catalyst has a rocky history when it comes to beating or missing both top- and bottom-line views. 

The company’s return on equity is a very strong 31%, an indication of good management. 

Analyst ratings compiled by MarketBeat show that Catalyst has been designated a “moderate buy” with a price target of $14.81, a potential upside of 12.81%. That’s a more realistic buy zone, at the moment, rather than watching for the stock to zip past that prior high of $17.22, given the current market conditions. 

As a whole, biotechs are among the market’s biggest winners right now, with companies such as Apellis Pharmaceuticals (NASDAQ: APLS), Aerie Pharmaceuticals (NASDAQ: AERI), Belite Bio (NASDAQ: BLTE), Verona Pharmaceuticals (NASDAQ: VRNA) and Revance Therapies (NASDAQ: RVNC) being some of the top price performers in the market right now, among all industries and sectors. 

With the exception of Apellis, which is a mid-cap, all the others fall into the small-cap category, where you’ll often find stocks with outstanding price action. As noted earlier, a small market cap and small float can help a stock rise to the top without much institutional support, but always use caution, especially in the notoriously volatile biotech sector, where a disappointing clinical trial can send a stock plummeting. 
Small-Cap Catalyst Pharma Is Among Markets Best Price Performers




 

Should you invest $1,000 in Catalyst Pharmaceuticals right now?

Before you consider Catalyst Pharmaceuticals, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Catalyst Pharmaceuticals wasn't on the list.

While Catalyst Pharmaceuticals currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Catalyst Pharmaceuticals (CPRX)
2.3666 of 5 stars
$16.97-0.4%N/A27.82Moderate Buy$17.13
The Carlyle Group (CG)
2.8617 of 5 stars
$29.38-0.8%4.42%6.15Hold$39.87
Apellis Pharmaceuticals (APLS)
2.5516 of 5 stars
$50.96+3.0%N/A-8.17Moderate Buy$73.00
Aerie Pharmaceuticals (AERI)
1.7474 of 5 stars
$15.25flatN/A-19.80Hold$16.90
Belite Bio (BLTE)
1.9185 of 5 stars
$31.63+1.5%N/AN/ABuy$57.50
Verona Pharma (VRNA)
2.1556 of 5 stars
$12.61+0.4%N/A-9.27Buy$28.75
Revance Therapeutics (RVNC)
2.3972 of 5 stars
$23.01+1.0%N/A-5.87Moderate Buy$37.90
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

Contributing Author: Retirement, Asset Allocation, and Tax Strategies

Kate Stalter is a Series 65-licensed asset manager, with more than two decades of experience in various areas of financial services. As an investment advisor and financial planner, Kate personally manages client portfolios, with a focus on successful retirement, including asset allocation, income generation and tax strategies. Kate also serves as a capital-markets contributor at Forbes.com, and is an expert columnist for the investment advisory channel at U.S. News & World Report.
Contact Kate Stalter via email at stalterkate@gmail.com.