Good Morning!
EPIRUS Biopharmaceuticals Inc. EPRS is in the drug development business. A month ago, the stock was cruising in the $2-$4 zone as the outlook looked relatively rosy.
But then management made the tough call of mothballing the lead program and laying off 40% of the staff to conserve cash.
Wall Street wasn’t happy at the time. But the last few weeks hit bottom and now we’re seeing shares surge in RELIEF!
With the big sites mumbling about whether the bears went too far and even the analysts only cutting to “neutral,” there’s big room here to bounce.
The EPRS chart speaks loud and clear on that front:
Is that the mother of oversold rebounds brewing? I’m not banking on EPRS to recover its pre-confession glory but there’s still MAJOR upside here now.
It helps when you have guys arguing in public that EPRS is “about to soar higher.” Whether you believe the logic, the buzz here favors the bulls!
Buzz, after all, is what drives eyeballs across tickers that were once written off for dead. Buzz drives volume . . . and look at those gray bars rising.
Volume drives price and more importantly for us, the indicators. See the MACD crossing signal and turning positive? Bull sign.
The RSI flirting with the 30-point line after weeks exploring DEEP oversold territory -- bull sign, when and if it can only nudge a little higher.
And don’t worry about whether we’ve missed the party. Looks like it would take a 200% rally just to recover the 50-day trend, let alone higher levels.
Not saying EPRS rises instantly to meet the trend, but the laws of statistics do say that sooner or later you usually see a convergence.
And while EPRS has seen the fundamental outlook take a hit, something like disaster levels of bad news have already been priced in at this point.
Yeah, EPRS lost its top program. But it’s not because they lost hope in the drug -- it’s all about “cost savings,” not the technology.
Those cost savings, by the way, saved EPRS $72 million. We’re looking at a company that’s currently trading at $19 million in market cap.
If I read that math right, they’ve still got $72 million in assets and roughly enough cash to pay the current bills.
Maybe the drug program they just mothballed is worth a couple million at minimum? Consider it the rainy day fund here!
Bottom Line: Like the guy says, EPRS is priced for disaster even though it really only reported bad news. That’s a potentially huge mismatch.
Surviving executives are still gung ho about the new business model. Barrons says it’s going to be a quiet year but at worst that rates “neutral.”
By the way, look at that Barrons target again. That’s a LONG way from here, isn’t it? And that’s AFTER the downgrades!
I love a story like this. Fly, my vultures! EPRS is far from dead but you can eat your fill on the chunks you hack off the bears!
Sincerely,
Michael Reef
yourstockguy@gmail.com
