CARA Stock Forecast 2019
Covering the marijuana industry day-to-day, many investors have begun developing a blindside to what was the start of it all: the medical marijuana industry.
But they do so at their own risk, as companies like Cara Therapeutics Inc (NASDAQ:CARA) are coming out with many novel ways to treat pain and ailments via cannabis. And as a result, the CARA stock forecast has me seeing the company hitting as high as $20.00 per share (about a 33% return) over the next six months, with the potential for more gains down the road.
When it comes to the CARA stock forecast, however, it’s important to take a step back and take in the whole company.
Cara Therapeutics Inc is not a medical marijuana company—or, rather, it is not only that. It is a biomedical pharmaceutical company that is at the forefront of researching marijuana products as possible treatments for pain.
This has long been one of the brightest promises of marijuana as medication: that it can displace other more harmful pain relief treatments like opioids.
This would be a great market to leap into, considering how dire things have become with opioids and the subsequent epidemic that has swept many parts of the world.
Chart courtesy of StockCharts.com
Cara Therapeutics is looking into both cannabis as an alternative to pain treatment, as well as opioids that don’t have the same deleterious effects. So when investing in CARA stock, you’re buying into a company that is exploring innovations in both.
Why CARA Stock Could Reach $25.00 in 2019
While I’m very confident that CARA stock will see a return of at least 33% (jumping from about $15.00 per share to $20.00), those gains could be even higher during the course of 2019.
There are a number of factors to consider.
First, the company is a pharmaceutical company first and foremost, not a pot company.
While it does benefit immensely from marijuana hype, it also has to contend with the roller coaster nature of pharma stocks. That means lengthy trials with uncertain results, with the news often dictating the company’s stock’s fate.
On the flip side, it has the benefit of being in two very volatile markets that are known for big yields in short time frames.
In Cara Therapeutics’ case, that could come by way of its medical marijuana research, centered around a treatment in development called “CR701,” and its flagship opioid drug in development, “Korsuva,” which entered important phase 3 trials last year and plans to see results from these tests by mid-2019. (Source: “Cara Therapeutics Completes Enrollment of KALM-1 Pivotal Phase 3 Trial Of KORSUVA™ (CR845/ difelikefalin) Injection in Hemodialysis Patients with Pruritus,” Cara Therapeutics Inc, January 7, 2019.)
Investors interested in Cara Therapeutics ought to be on the lookout for the release of these results, as they will very likely determine the fate of CARA stock for the remainder of 2019.
And there’s where the uncertainty comes in. While I believe that through hype alone we should be able to see a minimum 33% return, higher gains will be based on a couple of factors (including broader market trends).
But the most pertinent development will be the success or failure of Korsuva. Should the drug prove effective, then expect a major spike in CARA stock.
CARA Stock Financials
As you would expect, Cara’s financials are heavily impacted by large investments in research and development (R&D).
As a result, Cara reported net losses of $19.4 million, or $0.51 per basic and diluted share in Q3 2018, compared to a net loss of $12.4 million a year prior. (Source: “Cara Therapeutics Reports Third Quarter 2018 Financial Results,” Cara Therapeutics Inc, November 6, 2018.)
The company was able to add $5.0 million in revenue by way of license and milestone fees during the quarter, which it did not have a year ago.
R&D accounted for the largest portion of the spending, hitting $22.3 million in the quarter, a huge jump from $9.2 million in 2017. This speaks to the company’s efforts being kicked into high gear as its drugs near completion.
While the financial report wasn’t exactly brimming with positive news, it is not unusual for a pharma company to see many quarters of deficit spending as it feeds its research and development departments and attempts to bring its treatments to market.
The company is also a smaller player in the industry, with the Cara Therapeutics stock market cap at around $600.0 million. Of course, that is all relative, as it has one of the higher market caps for marijuana-related pharma companies. Still, all things considered, it is a smaller company in the pharmaceutical industry.
Cara Therapeutics Pipeline
As mentioned above, coming down the Cara Therapeutics pipeline is Korsuva and another medication called “Difelikefalin.” (Source: “Cara Therapeutics Drug Development,” Cara Therapeutics Inc, January 18, 2019.)
Korsuva is considered to be the company’s flagship drug at this point and will likely have the largest bearing on the future of CARA stock in 2019—that is, provided there isn’t a major breakthrough in its medical marijuana research.
CARA Stock Recap in 2018
The one major caveat in all this is that Cara still has to contend with the often-unpredictable pharmaceutical market.
For instance, the company lost big in December, primarily due to an overall pullback in the pharma sector. So when investing in CARA stock, be aware of the many factors that could impact the company’s share price.
The company’s downfall coincided with major biotechnology ETFs taking a nosedive, which means that there are several things beyond Cara’s control that could radically affect stock prices.
So investors ought to be aware that no matter how rosy things may seem, even if everything goes according to plan with its drug trails, there’s still the risk of a larger market slowdown among pharmaceuticals.
The CARA stock forecast is looking up.
The company climbed 10% over the past month after a tough December and has a number of positive developments on the horizon.
While not a traditional medical cannabis stock, it is still very much a company at the forefront of medical marijuana, and as such has huge potential.
How that pans out in 2019 will be largely based on Cara Therapeutics Inc’s success with drug trials, its R&D, and how well pharma stocks perform.