Before today, Kura Oncology Inc (NASDAQ:KURA) was down about 50% from its initial public offering of $8, and about 82% from its all-time high. And with all four analysts lending their infallible “buy” recommendations to KURA stock, you wouldn’t have been thought of as the fool in the room yesterday to think that maybe the company was just another example of the irrational analyst proclivity to steer clear from “sell” recommendations.
Today, you would, as KURA stock is up a whopping 34% in one day.
That gain comes on the strength of Kura Oncology Inc’s second-quarter earnings. Where analysts expected a loss of 36 per share, the company tallied a narrower-than-expected loss of 36 cents. Overall, the company saw a net loss of $13.3 million (wider than last year’s $10 million loss).
Other than that, the market is applauding the clinical-stage biotech’s positive update on its phase-2 trial of tipifarnib in advanced HRAS-mutant solid tumors. After positive results, Kura Oncology plans to bring in seven more patients for testing. Oppenheimer analyst, Michelle Gibson states:
“We view this data as validating Kura’s HRAS hypothesis for tipifarnib as a single-agent to inhibit HRAS-mediated MAPK-activation. Follow-up data is expected in 2017 (potentially ASCO), and we will be looking for further clarity on HRAS’ role in these tumors, including as a driver-oncogene. We note, however, that tipifarnib’s mechanism in HRAS is distinct from other indications (CMML, PTCL, MDS) being evaluated.”
Gibson maintains a price target of $16.
Bottom Line on KURA Stock
Kura Oncology has absolutely no commercially approved products on the market. It runs purely on the hopes and dreams of investors. That means it’s highly volatile.
But does this one-day gain mean that you can also trust the analyst price target, where even the lowest estimate for $12 is a 110% gain from the current level? You’d just as soon want to trust the analysis that the Dow Jones Industrial Average is going to 20,000 by this time next year. After all, that prediction worked out fabulously last year.
If you’re in KURA stock for the long term, watching the bend for profitability, then I can assure you that you are in the wrong investment. Just ask the company itself, which expects to “incur losses over the next several years and may never achieve or maintain profitability.”
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.