NEW YORK (TheStreet) -- Shares of Raptor Pharmaceutical Corp. (RPTP) are dipping by 5.85% to $5.47 on heavy trading volume Thursday afternoon, as the biopharmaceutical company is in talks with investment banks to hire a financial adviser to explore a possible sale, according to sources cited by Reuters after yesterday's market close.
The move may not lead to a sale, the sources added.
JMP Securities upgraded the stock to "market outperform" from "market perform" and established a $9 price target following the report.
A sale of Raptor makes sense because it is almost a classic model for recent transactions where specialty pharma companies have purchased orphan disease companies, the firm said.
"Raptor has steady revenue from Procysbi, approved for cystinosis, and it will soon begin selling Quinsair, an antibiotic for cystic fibrosis in the EU and Canada. While the company could be quickly profitable on these assets alone, as an independent company, it must invest in R&D to drive long-term growth, which is a drag on earnings," JMP Securities wrote in a note.
A number of companies including Horizon Pharma (HZNP), Shire (SHPG) and Allergan (AGN) could be interested in the company, according to the firm.
Novato, CA-based Raptor is focused on developing and commercializing treatments for people affected by rare and debilitating diseases.
About 2.01 million of Raptor's shares were traded by this afternoon compared to its average 30-day volume of 1.2 million shares per day.
Separately, TheStreet Ratings Team has a "Sell" rating with a score of D on the stock.
The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: RPTP