Novocure Share Price Forecast September 2021 – Time to Buy NVCR?
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Shares of oncology company Novocure ( NASDAQ: NVCR) are in the green after closing at $138.67 as of September 9th (23:30 UTC-4). The shares skyrocketed 40% in a single day back in April when one of its products was being tested for non-small cell lung cancer. Since the shares’ June highs, they have fallen 40% which has made many investors question whether it’s the right time to buy the dip.
Novocure – Technical Analysis
According to Novocure’s financial statement, the company’s market cap is $14.373 billion with total assets worth $1.097 billion. Revenue for 2020 was at $494.37 million with a profit margin of 4.01% compared to revenue of $351.32 million in 2019.
Moving averages for Novocure such as Exponential Moving Average (100)(165.06), Simple Moving Average (100)(181.44), Exponential Moving Average (200)(159.04), and Simple Moving Average (200)(169.17) is indicating a sell action. On the other hand, oscillators such as Relative Strength Index (14)(41.48), Stochastic %K (14, 3, 3)(65.47), Commodity Channel Index (20)(75.97) and Average Directional Index (14)(35.81) are neutral.
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Recent Developments
Novocure produces cancer-fighting wearable devices called Optune. It uses tumor treating technology with the help of low-power electrical fields to prevent cancer cell’s from multiplying. The company reported results of Optune usage in combination with Nevaxar to fight a form of liver cancer called hepatocellular carcinoma, back in the beginning of July, which drove shares upward. The problem was that it evaluated less than a few dozen patients which were too small to draw any meaningful conclusions.
The good news is that there are no significant adverse events reported by patients receiving Optune treatment. However, the disease control rate of the drug which had improved still lagged behind Wallstreet expectations. The company is now moving forward with the program, currently designing a phase 3 trial for the hepatocellular carcinoma market. However, investors should concentrate on the other phase 3 trials that already have addressable markets.
Multiple patents associated with Optune are due to expire between 2022 and 2035. This puts various aspects of the drug’s research in jeopardy. The company thus decided to invest in research and development to the tune of 26% of its revenue. Optune’s label was expanded by the FDA in 2019 to include mesothelioma.
Should You Buy NVCR Shares?
Investors have ample hope that Optune’s growth can be reignited even though sales are slowing down. The company’s phase 2 trials on some of its products have suggested improved overall survival for all three forms of cancer( NSCLC, pancreatic cancer and ovarian cancer). The company expects that its current phase 3 trial pipeline will yield twenty times more than the potential market opportunity today. There is definitely potential for Optune to reach a revenue of over a billion dollars considering that NSCLC makes u 54% of all lung cancer death cases. These are great shares to pick up for investors interested in biotech.
Compared to other med-tech giants, Novocure shares aren’t cheap at the moment. For instance, its price to sales ratio of 27 is ahead of other companies such as ResMed (13), Dexcom(25) and Intuitive Surgical(25). While all the other companies are growing, the growth potential is highest when it comes to Novocure. Neptune’s approval now depends on the data monitoring committee’s NSCLC recommendation, which can ignite a surge. Thus, there is little reason to be scared of Novocure’s valuation as they have a large addressable market ahead.
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