2024 didn't exactly get off to a roaring start for Harmony Biosciences Holdings (NASDAQ: HRMY) stock. The neurology-focused biotech's shares took a nearly 5% hit on Tuesday, the first trading day of the year. The culprit was a recommendation downgrade from a prominent researcher. By contrast, the slumping S&P 500 index only suffered a 0.6% decline.
Harmony is now a sell, according to Bank of America
Well before the market open that day, Bank of America Securities analyst Jason Gerberry changed his recommendation on Harmony. He now feels the stock is worthy only of an underperform (sell, in other words) tag at a price target of $30 per share, where previously he ranked it as neutral.
In a new research note, Gerberry expressed concern that the biotech has a dearth of "high-impact catalysts." He also opined that Harmony will likely have a tough time coping with the loss of exclusivity of Wakix.
This medication, so far the company's only Food and Drug Administration (FDA)-approved product, is designed to treat narcolepsy. It earned that approval in April 2019. Its exclusivity end date is Aug. 14, 2026, and the Bank of America prognosticator believes this will be extended only by several years at best.
Harmony is profitable, but...
All that being said, as Gerberry admitted, Harmony is a profitable company. That's quite the rarity in the biotech world, which is capital-intensive and highly speculative at even the best of times. Still, Harmony's position as a developer of only one approved drug leaves it vulnerable, and this downgrade likely won't improve investor sentiment on its prospects.
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.