Aurinia Pharmaceuticals (NASDAQ: AUPH), a company focused on developing treatments for autoimmune diseases, saw its share price fall by more than 5% in early trading on Monday. The stock has recovered some of its losses since hitting this intraday low, but it was still 3.3% lower than Friday’s close as of 12:17 p.m. ET. Aurinia’s trading volume is also on the high side despite the lack of any significant news from the company, its competitors, or the biopharma industry at large.
Aurinia Pharmaceuticals has been the subject of takeover speculation since it got the green light from the Food and Drug Administration (FDA) for its lupus nephritis drug, Lupkynis, in January 2021. However, a formal tender offer has yet to emerge nearly two years into its commercial launch and Lupkynis has not met some investors’ high expectations from a sales standpoint.
The key issue is that the biotech’s shares have been commanding a premium (over 7.5 times its projected 2024 sales) this year because of the company’s appeal as a buyout target. In a market that seems to be growing increasingly more cautious toward pure-play growth stocks, it’s not entirely surprising to see Aurinia Pharmaceuticals shed some of its premium valuation — especially with a lack of additional buyout rumors recently.
Is this dip a buying opportunity? From a fundamental standpoint, this small-cap biotech stock probably isn’t worth buying at these levels. Aurinia Pharmaceuticals’ shares aren’t exactly cheap, and the company’s near-term organic growth prospects aren’t quite strong enough to justify its current valuation.
If you’re willing to take the long view, though, this autoimmune disease specialist could be worth adding to your portfolio. Lupkynis may not be meeting some expectations, but the drug is actually performing reasonably well in the marketplace. Eventually, it could support a fundamental-based run in the stock.
10 stocks we like better than Aurinia Pharmaceuticals
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and Aurinia Pharmaceuticals wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
*Stock Advisor returns as of September 18, 2023
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]