Stock Analysis: GW Pharma (GWPH) offers irresistible upside potential

For GW Pharmaceuticals (NASDAQ: GWPH), the main growth strategy for the current fiscal year is to expand its product pipeline beyond Epidiolex, the highly successful flagship drug that continues to be the company’s main revenue driver.

The company, the largest producer and exporter of legal medical cannabis, is preparing to launch Epidiolex in the U.K this quarter, followed by the other European countries including France and Germany. It is estimated that Europe is emerging as the biggest market for medical marijuana.

Related: A look at the odds of Aphria surviving the cannabis bubble

It needs to be noted that the company’s performance in the recent quarters was much better than what was widely expected, though it is yet to fully recover from the losing streak. Considering the healthy pipeline and favorable market conditions, investors should not be concerned about the uncertainty over the firm’s turnaround.

Forecast

Given the bullish outlook for the sector, with experts forecasting steady growth this year and beyond, investors will be keeping an eye on the stock ahead of the next earnings announcement, which is expected in the final week of May. The recent pull back can be attributed to the coronavirus outbreak that hit markets across the world. The setback, in its nature, is temporary and a recovery is inevitable.

Buy GWPH?

The low valuation offers an opportunity to buy the stock. Almost all the analysts following GW Pharma are bullish about its future performance. Those holding the stock can expect an impressive uptick in value in the coming months. Moreover, the company has a performance history that is quite inspiring.

GW Pharma ended 2019 on a promising note, recording a marked increase in sales, reflecting the strong demand for Epidiolex. The top-line also exceeded the market’s prediction. Consequently, loss narrowed to $0.07 per share from $0.20 per share last year.

Flagship Product

Epidiolex was launched in the US early last year. The cannabidiol-based formulation, which is indicated for the treatment of epilepsy, secured regulatory approval in Europe later. Currently, it is being tested for additional indications in patients suffering from Tuberous Sclerosis Complex and Rett Syndrom.

Related: GW Pharma Q4 2019 Earnings Conference Call Transcript

Shares of GW Pharma traded near the $100-mark this week, which is close to the levels seen at the beginning of the year. The stock dropped about 39% in the past twelve months, all along experiencing a high level of volatility.

Follow our Google News edition to get the latest stock market, earnings and financial news at your fingertips.