There are signs that COVID-19 is on the wane. Or, at least, we’re learning to live with it. Yet new treatments still emerge, and one of the latest comes from drugmaker Veru (VERU). Veru shot up as much as ~237% in today’s trading session so far.
Given what we know about the company and the potential of this new treatment, I’m bullish on Veru. This could be a real winner in the short term.
The last year for Veru has been largely up-and-down. It tends, though, to stick within a close range of around $6 to $10 per share. However, with the latest news, the company has tripled from its Friday close.
That news featured the results from Veru’s Phase 3 trials of its COVID-19 treatment. The treatment produced “clinically and statistically meaningful” results. It’s designed to address hospitalized patients who have the disease, specifically those with a high risk for adult respiratory distress syndrome (ARDS).
Reports noted that the Independent Data Safety Monitoring Committee wanted the tests shut down, but no safety concerns connected to the testing could be identified. Now, Veru will take these results to the FDA to try and get emergency use authorization.
Wall Street’s Take
Turning to Wall Street, Veru has a Moderate Buy consensus rating. That’s based on three Buys assigned in the past three months. The average Veru price target of $25 implies 103.5% upside potential.
Analyst price targets range from a low of $21 per share to a high of $29 per share.
A Stable Front from the Hedge Funds
Hedge fund involvement in Veru has taken a “wait-and-see” approach and has held that approach for the last several months. In fact, based on the TipRanks 13-F Tracker, hedge fund involvement in Veru has remained static since June 2021.
4,451,342 shares of Veru were held by hedge funds in June 2021. That’s the same number seen in both September and December of that year.
As for Veru’s dividend history, it used to be almost ideal—used to be. The company hasn’t issued a dividend since 2014 and shows no signs of doing so in the future. Before that point, the dividend regularly increased on an annual basis. Then April 2014 hit, and the dividend repeated at the 2013 level until halting altogether.
The Glorious “If”
“If.” The word packs a heavy load of significance. Rudyard Kipling wrote a whole poem about it. In this case, “if” could bring with it a lot of opportunities.
Until earlier today, Veru was a company that didn’t have a lot going for it. The last major move for Veru came back in December 2021, when the FDA approved Venu’s Entadfi treatment for benign prostatic hyperplasia.
This, however, is an order of magnitude bigger. If Venu has a working treatment for severe COVID-19 cases—since they’re hospitalized, that would seem to be the case—it could effectively write its own ticket. It already has; the company’s value has roughly tripled since Friday’s close, and it may well head higher in the next few days if the treatment holds water.
Getting that emergency use authorization from the FDA would effectively open up a massive marketing pipeline as hospitals and clinics the world over place orders.
The problem here is that Veru’s future performance hinges entirely on that COVID-19 treatment making it through FDA scrutiny. If it works as well as the Phase 3 tests suggest, then Veru could be unstoppable.
With 100 shares of Veru currently trading around the price of a decent television, a speculative play here could pay off in a big way.
That bizarre interjection from the Independent Data Safety Monitoring Committee may be unnerving. Nonetheless, given that there’s no real support for it so far, it may not have much impact going forward.
Concluding Views
There is some value in speculation. It’s no different for Veru. It’s a company that’s still trading well under its lowest, average, and highest price targets. Buying in on Veru right now could see an explosion in value thanks to the sheer potential involved.
However, without that FDA approval, there’s no further reason to speculate. Veru is about to release a drug that will stop some of the worst cases of COVID-19: the hospitalized cases. That’s a huge step forward. Veru must live up to that narrative to keep that valuation.
It all comes down to that one word: “if.” If Veru gets approval from the FDA the sky is likely the limit here. If it doesn’t, then there’s not much to support Veru’s sudden explosively-growing valuation.
I take a bullish stance here. Veru stock is currently trading well under its lowest targets. This is in spite of the explosive gains already seen. There could be much more here, enough to dwarf even the current share price.
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