Amphastar Pharmaceuticals, a biopharmaceutical stock, is in a 5% buy zone, behaving constructively calm after a few volatile weeks. The drug stock is the IBD 50 Stocks To Watch pick for today.
Amphastar develops over 20 injectable, nasal and inhalation medical products, mainly used in hospitals or urgent care clinics.
Its over-the-counter products include Primatene Mist asthma inhaler, epinephrine and a generic injection for low blood sugar.
On April 24, the drug company announced it would acquire Baqsimi nasal spray from Eli Lilly for $500 million in cash, with an additional $125 million due on the one-year anniversary of the deal.
Amphastar plans to finance the purchase with about $500 million in new debt. The deal is scheduled to close in the second or third quarter.
Baqsimi is the first and only nasally administered product to treat severe hypoglycemia (very low blood sugar) in diabetics. The product produced $139.3 million in sales last year and is available in 27 countries.
AMPH holds the elite No. 1 spot out of 790 stocks in the biotech industry group, which is ranked 11th out of 197 IBD groups.
Drug Stock Sets Up Another Key Base
The stock gained 23% after its latest earnings report and hit an all-time high 45.50 on May 23. AMPH has rallied 60% this year so far.
Shares fell 6.7% in heavy volume on April 24 on the Baqsimi news. Shares tumbled for five consecutive sessions and sank below the 50-day moving average.
The stock shot up 13% on May 10, following better-than-expected first quarter earnings and sales numbers, lifting shares back above the 50-day line.
AMPH is in the buy zone of a long cup-with-handle base. The buy zone goes from the 44.25 buy point to 46.46.
Wells Fargo raised its price target to 44 from 40 and maintained its equal weight rating on May 17, adding to interest in the stock.
With tight trading recently, watch for Amphastar to form a three-weeks tight pattern with a 45.50 buy point.
Sales Growth On The Rise, Overdose Spray To Launch in Q3
First-quarter EPS grew 32%, down from 74% in December, but an improvement over Q3's 17% drop. Sales growth accelerated to 16% from 12% and 7%.
Amphastar's sales of its emergency low-blood-sugar kit increased 134% over the last year, mainly due to an increase in unit sales rather than price increases. The product made up almost 19% of net revenue, which was double last year's 9% slice.
First-quarter gross margin improved to 53% from last year's 46%.
The company, also in IBD Tech Leaders, expects 44% EPS growth for the current quarter. Analysts project 20% full-year EPS growth and a modest 1% gain in 2024.
The Federal Drug Administration approved Amphastar's opiate overdose nasal spray in March. The product is set to launch in the third quarter.
The company is developing generic drugs and additional insulin products. Three of them are under FDA review.
The medical stock holds highest-possible 99 IBD Composite and EPS Ratings.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
