The 'Double' Call in Human Genome (HGSI)

Human Genome Sciences Inc. (NASDAQ: HGSI) is not getting much of a boost despite being called as stock which could manage to double in price over the next 18 months by Barron’s.  Usually such a report would send shares flying with such an actively traded stock that is both heavily shorted and which had previously moved significantly.  Monday may just be more of a day of confusion since its share price is not rising.

If you go back to the highs from earlier this year based upon its new lupus drug’s great hopes, the stock is now down close to 75% from those highs.  Technically, a double in the stock would still not the stock back to its highs.

After increased short selling and after more tepid of a market responses to its lupus treatment, it seems that Human Genome will not turn a profit until 2014.  The report’s angle is based upon a wider doctor support in 2012 and a slight increase in demand.

The problem is that doctors have been slow in recommending Benlysta for lupus patients because the drug is relatively expensive against prior drugs which have been on the market for 40 years or more.  Doctors also say that the reimbursement process for Benlysta has been both challenging and time consuming. That is about to change in 2012 and that is the key driving force behind why Human Genome Sciences could double per Barron’s.

What is interesting is that the Thomson Reuters consensus price targets still has enough old price targets that have not been adjusted to the much lower current prices that the analyst field is already calling for a double in the stock and then some.  At $7.54, the Thomson Reuters consensus price target is above $18.00 today.

After having raised funds and with having a solid partnership under its belt, Human Genome Sciences should have enough capital to get it to profitability by 2014.  This is a blockbuster drug potentially and that could easily help out in the company’s valuation of $1.5 billion today.

JON C. OGG