Onyx Pharmaceuticals (ONXX) Is Trading at Pre-Kyprolis Approval Levels; Is It Time to Buy?

August 16, 2012 3:29 PM EDT
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Price: $124.70 --0%

Rating Summary:
    11 Buy, 12 Hold, 0 Sell

Rating Trend: = Flat

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    Up: 30 | Down: 30 | New: 23
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Remember when Onyx Pharmaceuticals (NASDAQ: ONXX) received FDA approval for Kyprolis? Well the stock sure doesn't.

Shares of ONXX are now back to pre-Kyprolis approval levels and analysts at Deutsche Bank said that's just not right. The firm said the downside aciton in the stock is a result of fear of a potential capital raise that had shifted buyers to sideline.

The fear has been an overhang on the stock since the second quarter earnings call and may have been heightened during a recent non-deal roadshow to the east coast, according to the firm.

With $590 million in cash, management continues to believe the company has a strong financial position, although they will not rule out a potential capital raise. Investors see the non-denial by management as a sign of an upcoming raise.

Although there is significant support for Onyx, with a looming raise investors are not rushing to buy.

With shares down 15 percent from the highs, however, Deutsche Bank said "a raise seems to be baked in at these levels."

If the company does do a capital raise, it will likely be a typically equity raise. However, looking at other deals in the sector there has been a trend toward opting for debt due to low interest rates.

The firm is maintain their Buy rating and $105 price target on ONXX, saying they believe "fundamentals remain strong & see Kyprolis beating Street expectations." However, "we believe near-term performance may be sluggish due to capital raise overhang," they added.

For an analyst ratings summary and ratings history on Onyx Pharmaceuticals click here. For more ratings news on Onyx Pharmaceuticals click here.

Shares of Onyx Pharmaceuticals are down 3.8 percent today to $67.97.

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Your grammar
Paul Julien on 2012-08-16 15:55:34
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I can't believe how poorly this is written. It is riddled with spelling and grammatical errors. Is this being written in the United States?


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