Why Savara (SVRA) Might Be a Risky Bet for Investors

Savara (SVRA) stock rose more than 21 percent on March 30 and gained over 3 percent in the pre-market trading session on March 31. The stock has been rising significantly despite no company-specific news. So, what’s the forecast for SVRA stock in 2021? Is it a good stock to buy or will it fall from these levels?

Founded in 1995, Savara operates as a clinical-stage pharmaceutical company. The company is focused on developing inhaled therapies for orphan lung infectious diseases. Savara’s lead candidate, Molgradex, is expected to enter the Phase 3 study by the end of the second quarter of 2021. The candidate will be evaluated for the treatment of aPAP (autoimmune pulmonary alveolar proteinosis).

Recently, two Wall Street analysts initiated coverage on Savara stock. On March 16, Piper Sandler analyst Yasmeen Rahimi initiated coverage on the stock with a target price of $7 and an overweight rating. Rahimi thinks that Savara is an “ideal value pick” based on the probability of Molgradex's success.

Oppenheimer analyst Francois Brisebois also initiated coverage on Savara stock with a target price of $4 and an overweight rating. According to TheFly, “The analyst believes IMPALA 2, which is expected to start in Q2, is significantly de-risked due to changes in study design such as the primary endpoint and patient population.”

There have reports that independent director David Ramsay recently bought 565 percent more shares in Savara. Also, Savara CEO Matthew Pauls bought 24,100 shares of Savara at an average price of $2.07 per share.

According to estimates compiled by Market Beat, analysts' consensus target price is $4.67 for SVRA stock, which is 139 percent above its current price. All four of the analysts tracking SVRA stock recommend a buy. The highest target price of $7 is 259 percent above the stock's current price, while the lowest target price of $3 is 54 percent above the stock's current price.

Savara stock isn’t among the most active stocks on the popular Reddit group WallStreetBets. Individual investors on WallStreetBets have been pumping heavily shorted stocks for a short squeeze. WallStreetBets' favorite stocks include GameStop, AMC Entertainment, and BlackBerry.

An investment in the biotechnology industry comes with a number of uncertainties. Savara generates net losses and its business model isn’t fully proven. The company’s value depends on the success of its lead candidate Molgradex. The stock could fall significantly if Molgradex fails in the clinical study or if regulatory authorities don’t approve it. Investors face high risk since Savara is a penny stock.

Savara stock trades on Nasdaq under the ticker symbol “SVRA.” Investors can buy the stock through any traditional or online brokerage like Robinhood. You have to allocate money to your stock trading account before you can start investing. The stock has gained 69 percent YTD but has lost 3 percent over the last year.