Is GW Pharmaceuticals a Good Buy in December 2019?



GW Pharmaceuticals (GWPH) is a leading player in the development of cannabinoid medicines. The company offers the first FDA-approved plant-derived cannabinoid medicine, Epidiolex oral solution. The regulatory agency approved it for two rare types of childhood-onset epilepsies.

GW Pharmaceuticals stock is up YTD (year-to-date) by 3.04% on Nasdaq. On December 23, the stock closed 46.90% below the 52-week high of $196. Also, the stock is up by 1.93% from $102.11 on November 29 to $104.08 on December 23.

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How is Wall Street pricing GW Pharmaceuticals?

A total of 15 analysts are covering GWPH as of December 24. Here, five are rating the company a “strong-buy,” and 10 are rating it as “buy.” The analysts gave the stock a target price of $206.07. This implies an upside potential of 97.99% compared to its last closing price.

In November, 15 analysts were covering GWPH. Of these, five rated it a “strong-buy,” and 10 rated it a “buy.” They set the target price at $206.93.

Morgan Stanley remains confident about Epidiolex’s growth prospects

On November 11, as reported by The Fly, Morgan Stanley analyst David Lebowitz reiterated the “Overweight” rating for GWPH. However, he reduced GW Pharmaceuticals’ target price from $233 to $231. He plans to pick up this stock on any weakness in price, given the robust long-term prospects.

The analyst highlighted Epidiolex’s third-quarter sales of $86 million in the US as a major factor supporting the company’s long-term projections. Also, he pointed out that investors had much higher expectations from Epidiolex, considering that the drug’s revenues far surpassed consensus in the first two quarters of fiscal 2019.

Also, Lebowitz noted that the drug was prescribed by 3,000 prescribers by the end of the third quarter. This is a big jump from the prescriber base of 2,500 at the end of the second quarter. The drug has been prescribed by almost half of the targeted 6,000 prescribers in the US.

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Oppenheimer reduced GW Pharmaceuticals’ target price

On November 6, as reported by The Fly, Oppenheimer analyst Esther Rajavelu reduced GWPH’s target price from $233 to $222. However, he maintained the “Outperform” rating for the stock.

The analyst pointed out the possibility of reduced new patient starts and higher attrition rates for Epidiolex. Therefore, he is reducing the drug’s future revenue estimates. He, however, believes that Epidiolex’s long-term growth prospects are not fully priced at GWPH’s share price.

Piper Jaffray remains positive for GWPH

On November 6, as reported by The Fly, Piper Jaffray analyst Danielle Brill maintained an “Overweight” rating for GW Pharmaceuticals. However, she reduced the company’s target price from $210 to $160. She expects Epidiolex’s revenue growth prospects to be lower than previously expected. This is due to the high patient attrition rate. She reduced Epidiolex’s peak sales estimates from $2.0 billion to $1.5 billion.

The analyst expects the drug’s European market launch and off-label usage to prove to be mid-term growth drivers for the company. Also, she expects Epidiolex’s sales to benefit from potential label expansion in tuberous sclerosis complex indication.

H.C. Wainwright and Needham gave GWPH a “Buy” rating

On October 30, as reported by The Fly, H.C. Wainwright analyst Douglas Tsao rated GWPH as “Buy” and set the target price at $170. The analyst expects Epidiolex to continue to penetrate in US and European markets. Further, he expects dose titration and increasing off-label usage to push up demand for the drug. Finally, the analyst expects anticipated Epidiolex to benefit from anticipated label expansion in tuberous sclerosis complex indication in mid-2020.

On October 21, as reported by The Fly, Needham analyst Serge Belanger rated GW Pharmaceuticals as “Buy” and set the target price at $200. The analyst expects Epidiolex to prove to be a blockbuster therapy.


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