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small-cap

Should Investors Exit From This NASDAQ-Listed Pharmaceutical Stock – ACRX

Mar 31, 2022 | Team Kalkine
Should Investors Exit From This NASDAQ-Listed Pharmaceutical Stock – ACRX

 

Should Investors Exit From This NASDAQ-Listed Pharmaceutical Stock – ACRX

AcelRx Pharmaceuticals, Inc.

AcelRx Pharmaceuticals, Inc. (NASDAQ: ACRX) is a specialty pharmaceutical company that develops and commercializes medications in medically supervised settings. Two of the company's medicines for moderate-to-severe acute pain are DSUVIA and Zalviso. ARX-02 and ARX-03 are two forthcoming products from the firm.

Why should Investors make an Exit?

  • Fall-in topline and continuous losses: ACRX witnessed a significant decline in total revenue to USD 2.82 million in FY21 (ended December 31, 2021) from USD 5.42 million in FY20. It is a loss-making entity and incurred a loss of USD 35.10 million in FY21 and USD 40.38 million in FY20 due to higher operating costs, resulting in negative profit margins.
  • Macro Headwinds: Unless organic cash from normal business operations is robust, recent market discussions about raising interest rates sooner to combat inflation will pressure the corporation to increase short-term borrowing for working capital. This is a temporary stumbling hurdle that makes it less appealing to investors.
  • Bearish Technical Indicator: On the daily chart, ACRX prices are sustaining below the downward sloping trend line and facing the resistance of the same. Furthermore, the momentum oscillator RSI (14-period) is trading at ~34.21. On the weekly chart, the prices are trading below the trend-following indicators 21-period and 50-period SMA, which may act as a resistance level for the stock.

Valuation Methodology: Price/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

ACRX's share price has remained on a bearish trend, fallen 82.41% in the past twelve months and is currently leaning close to the lower end of its 52-week range of USD 0.27 to USD 1.72. We have valued the stock using the Price/ Sales multiple based on relative valuation methodology and arrived at a target price of USD 0.23.

Based on the continuous losses, decline in topline, macro headwinds, current valuation, and bearish technical indicators, we recommend a "Sell" rating on the stock at the current price of USD 0.2832, up 1.36%, as of March 30, 2022.

Three-Year Technical Price Chart (as of March 30, 2022). Source: REFINITIV, Analysis by Kalkine Group

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.