Gene therapy developer Rocket Pharmaceuticals (RCKT) investors woke up in delight as shares skyrocketed in Wednesday morning’s pre-market trading session. When the bell sounded, the stock continued its trajectory and it currently sits 38% higher than it last closed at.
This comes after the company announced that it has aligned with the Food and Drug Administration (FDA) on the next steps for its RP-A501 product. This therapy is engineered to address Danon disease, which is a fatal inherited form of cardiomyopathy.
Currently, the only option for those suffering from this awful disease is a heart transplant. Without transplantation, death is a waiting game. However, the FDA agrees that RP-A501 shows great promise and has given the green light on the Global Phase 2 Trial for this treatment.
Rocket Pharmaceuticals CEO Gaurav Shah, M.D., says that this milestone in getting the therapy to market is the fastest way to get the therapy to those who need it most. It’s a potentially transformative therapy and the quicker it gains approval the better not just for the company and its investors, but those living with Danon Disease.
The news of FDA aligning with Rocket Pharmaceuticals came as a surprise to analysts at Stifel, but in a good way. This is a positive sign that the therapy holds great promise as it’s moving through the steps to approval faster than expected.
This news was coupled with the announcement of new shares and pre-funded warrants offered in the range of $150 million – all of which are run through JPMorgan, Morgan Stanley, and other financial institutions.
RCKT was headed in the wrong direction over the past few months, down more than 8% since mid-June. But today is a step in the right direction. Is it enough to justify buying this stock, though?
We’ve uncovered three things through the VectorVest stock analysis software that you need to see whether you’re a current or prospective investor. Don’t make any move with RCKT before reading below…
While the Timing is Excellent for RCKT, the Stock Has Poor Safety and Very Poor Upside Potential
VectorVest simplifies your trading strategy through a proprietary stock rating system that boils down everything you need to know to make clear, calculated investing decisions in 3 simple ratings. These are relative value (RV), relative safety (RS), and relative timing (RT).
Each rating sits on an easy-to-understand scale of 0.00-2.00, with 1.00 being the average. Just pick safe, undervalued stocks with a positive price trend to win more stocks with less work!
It gets even easier, though, as the system also issues a clear buy, sell, or hold recommendation for any given stock, at any given time. Here’s what we’ve found as it pertains to RCKT:
- Very Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (projected three years out) to AAA corporate bond rates and risk. This offers far superior insights for investors than a simple comparison of price to value alone. However, RCKT has a very poor RV rating of 0.29 right now. The stock is overvalued, with a current value of just $4.33.
- Poor Safety: The RS rating is an indicator of risk. It’s derived from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity. As for RCKT, the RS rating of 0.64 is considered poor.
- Excellent Timing: As you can see by watching the stock climb higher and higher in today’s trading session, there’s no denying the excellent timing RCKT has right now - which is confirmed by an RT rating of 1.65. This is all based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 1.10 is considered good - but is it enough to earn the stock a “buy” recommendation? Does excellent timing outweigh poor safety and very poor upside potential, or vice versa?
Don’t play the guessing game or let emotion influence your decision-making. Get a clear answer on your next move with a free stock analysis at VectorVest today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. RCKT is up more than 40% on news of alignment with the FDA on its groundbreaking Danon Disease therapy. But despite excellent timing, the stock does have poor safety and very poor upside potential.
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