Repros Therapeutics Inc. (NASDAQ: RPRX) is a small cap biotech stock that is not exactly having the best year, despite big gains on Friday. With shares close to $10, its 52-week range of $8.46 to $28.99 signals just how hard of a year it has been. So, what do you do when an analyst report comes out that maintains a price target position that implies shares can more than a double ahead?

A Bank of America Merrill Lynch report on Monday maintained a Buy rating and kept a $24 price target objective on the stock. The call is from Steve Byrne, Tazeen Ahmad and Sara Blum, talking up positive Androxal data and noting significant long-term potential for the stock.

Repros was shown in the report as having its second Androxal study positive, and a pre-new drug application (NDA) meeting has been scheduled with the FDA. The analysts indicated that Repros reported positive top-line data from its 304 study of Androxal vs. AndroGel, following prior favorable results from the first of two pivotal trials. They also noted that Repros has scheduled its Type B pre-NDA meeting in the first half of November and reiterated expectations to file a new drug application near year-end 2014.

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The report said:

Repros will host an investor day on October 31. At the BioCentury conference on Friday, CEO Podolski indicated he expects increased payor scrutiny on exogenous testosterone products in obesity-caused secondary hypogonadism following FDA’s recent ad com, creating a larger long-term opportunity for Androxal.

This is a big upside situation, coupled with it having lots of risk. The Merrill Lynch report indicates that additional studies may be necessary and that Repros plans to start a metabolic benefit study in the near term. The team’s investment thesis said:

We rate Repros shares Buy. We assume the company’s lead product, Androxal, will receive US approval for testosterone replacement therapy (TRT) and launch in 2017. Our analysis of clinical data indicates this drug could be differentiated from current TRT therapies. We assume only US sales for the product until Repros provides clarity on its ex-US strategy. Repros’ second product, Proellex, is in phase 2 trials for treatment of endometriosis and uterine fibroids.

We would caution that the market has so far ignored the brokerage report, and we would further point out that the Thomson Reuters consensus price target on the stock is up at $27. Repros shares were down more than 3% at $10.14 on Monday, but that is after shares rose from $8.96 on Thursday and to $10.48 on Friday. We would warn readers that this stock has a market cap of only about $234 million after Friday’s bounce.

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