by H.S. Ayoub
On Friday, shares of Access Pharmaceuticals jumped again, this time more than 70%, as a couple of fund managers declared in the upcoming February 12th issue of BusinessWeek magazine that the company’s stock is way undervalued.
In fact, one fund manager believes that the company’s flagship product, MuGard, which was approved in December of 2006 by the FDA, was alone worth more than the company’s market cap. MuGard is intended to be used by cancer patients suffering from oral mucositis as a side effect of chemotherapy. The company also has various other cancer drugs in late phase trials.
An analyst also suggested that the stock could be worth $10-$20 a share in two years! Of course, the fund manager is playing his prediction safe with such a wide range. It is like saying a stock could be worth anywhere between $50-$100.
Shares of ACCP where in the high $2 range before the article was released on the web on Friday morning, by the end of trading the stock is now over $5! A lot closer to that $10 eh!
I do have a problem with the latest price jump; how could a stock gain 70% on a mention? I am niave enough to believe that stocks are fairly hyped (notice I did not say fairly valued!), and a magazine article mentioning the opinions of fund managers who own the stock should not make that much of a difference.
Now granted, I am aware that shares of Access Pharmaceuticals trade on the bulletin board, with a market cap of less than $20 million, and a float of slightly more than 3 million shares. Regardless, a stock exchange is just like any other in that volatility is always inherent in a stock, but a 70% upside on an opinion is tremendous, even for a penny stock. This is especially so considering the 120% jump back in October that I previously wrote about.
I placed ACCP on my personal watch list back in October thinking that an FDA approval, which did happen in December, would be the real catalyst for a large jump. While shares of ACCP did gain in December following the FDA announcement, it was nothing compared to Friday’s.
Considering the trumultous history of ACCP’s stock, which after a failed nanotechnology venture went down from the $40 level all the way down to penny stock status, how could someone realistically consider it a good investment at this point?
I still do believe that Access Pharmaceuticals is a great little company, with great potential, but the company’s stock isway too wild for my blood, especially right now.
For those investors not shy of bungee jumping and skydiving, ACCP may prove to be a fun play. As for myself, I will gladly continue to just watch Access Pharmaceuticals from a safe distance, until a better opportunity presents itself.