Why Neurocrine Biosciences (NBIX) Is Spiking Today

NEW YORK (TheStreet) -- Neurocrine Biosciences (NBIX) rose 77% Tuesday to $17.31 after news of a positive mid-stage study for one of its experimental drugs.

The drug, labeled NBI-98854, did much better than a placebo in reducing symptoms in patients with tardive dyskinesia, and illness that causes involuntary spasms and movements. In the study, doctors who rated patient symptoms said 67% of patients were "much improved" or "very much improved" after six weeks of using the drug. Only 16% of patients in the placebo group showed similar progress.

Nuerocrine still has to meet with the Food and Drug Administration about designing a late-stage study for the experimental drug. The San Diego drug company hopes to file a proposed study in the first half of 2014.

Nuerocrine does not yet have any products on the market.

Following news of the mid-stage study, Roth Capital Partners analyst raised his price target for Nuerocine to $22 from $16. Jefferies analyst Thomas Wei also raised his price target to $23 from $16. Wei estimates the new drug could be approved by 2017.

TheStreet Ratings team rates NEUROCRINE BIOSCIENCES INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NEUROCRINE BIOSCIENCES INC (NBIX) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • NBIX has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 11.78, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • NBIX, with its very weak revenue results, has greatly underperformed against the industry average of 11.2%. Since the same quarter one year prior, revenues plummeted by 92.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, NEUROCRINE BIOSCIENCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$10.78 million or 29.83% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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