Specialty drug stock Intra-Cellular Therapies is filling in a base and heading toward a buy point. The stock is up over 14% this month and 36% since mid-March. It is Thursday's IBD 50 Stocks To Watch pick.
The New York biopharma develops treatments for neuropsychiatric, neurological and other disorders. Major depression disorder (MDD) affects 21 million people in the U.S., with 11 million having bipolar disorders.
Intra-Cellular Therapies holds a high No. 5 spot out of 791 stocks in the Medical-Biomed/Biotech industry group, which is ranked 30th out of 197 IBD industry groups. The group moved up from 50th place four weeks ago.
Morgan Stanley initiated coverage on the drug stock Thursday, with an 80 price target and an overweight rating.
Drug Stock Getting Attention
Shares are building the right side of a long cup base with a 66.10 buy point. The drug stock got a 16.4% lift in huge volume in March after bipolar depression drug Caplyta showed positive results in a key study.
The jump sent shares above the 200-day moving average, where it continued to climb, before trading sideways this week. The positive news prompted several analysts to raise their price targets on ITCI, adding to interest in the drug stock, as shown in higher-than-average daily volume.
ITCI jumped another 4.9% on April 6 after RBC Capital raised its price target to 72 from 71 and maintained its outperform rating.
Its relative strength line hit a 52-week high, as indicated by the blue dot, according to MarketSmith Pattern Recognition. ITCI is about 3% off its 52-week high.
The Relative Strength Rating improved significantly to a lofty 91 in recent weeks, meaning the drug stock outperformed 91% of stocks in the IBD database in the last 12 months.
Quarterly Sales Grew 242%
Intra-Cellular reported a smaller-than-expected Q4 loss and higher sales on March 1. Quarterly sales growth is accelerating, realizing the sought-after "C" in the CAN SLIM investing strategy. The drugmaker posted 242% growth in Q4, up from 224% and 177% in the prior two quarters.
The company posted full-year 2022 sales of $250.3 million, with revenue dominated by its only FDA-approved revenue generating drug, Caplyta.
Management forecasts Caplyta net product sales will grow to between $430 million and $455 million in 2023.
"The robust growth of Caplyta in 2022 marked an extraordinary year for our company," said Dr. Sharon Mates, chairman and CEO of Intra-Cellular Therapies. "We expect 2023 to be another year of significant growth for Caplyta and the company."
Caplyta prescriptions tripled in 2022, according to the earnings report.
Not Profitable But Improving
Intra-Cellular spent over 53% of its 2022 sales on R&D expense, as it continues to work on drugs for Alzheimer's disease, Parkinson's disease and opioid use disorder.
The company is not yet profitable and expects a smaller $2.42 loss per share this year, with significant improvement to an 80-cent loss next year. Intra-Cellular reports Q1 earnings on May 9.
The drugmaker holds a high 96 IBD Composite Rating. Mutual funds own 62% of shares, with 568 funds owning ITCI in March, down from 587 in December, a red flag.
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