INSY Stock Forecast: Will It Continue Its Upward Momentum This Month?

insy stock forecast this month
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INSY Stock Forecast This Month

Depending on when you bought a piece of Insys Therapeutics Inc (NASDAQ:INSY), INSY stock could be one of the worst performers on the year…or best. Insys news has played with the company’s stock value, sending it swinging back and forth like a pendulum. The INSY stock forecast this month is positive, but I think, overall, this is one of the riskier plays in the marijuana market.

Here’s the thing about Insys: there’s a lot of drama surrounding the company. I would never characterize myself as a conservative investor (I write about high-volatility marijuana stocks, after all) but I’ve never been partial to companies that court controversy and legal troubles.

And that’s exactly what’s happening in the Insys news.

Chart courtesy of StockCharts.com

In February, the company was subjected to a state lawsuit in New York, alleging that the company promoted its fentanyl-based drug “Subsys” to the detriment of patients’ health. Insys Therapeutics stock took a nearly eight-percent fall in the weeks preceding the legal action.

In May, the company failed to obtain a recommendation from the U.S. Food and Drug Administration (FDA) for its new drug application for buprenorphine sublingual spray. (Source: “INSYS Therapeutics Confirms Outcome of FDA Advisory Committee Meeting on Buprenorphine Sublingual Spray,” Insys Therapeutics, May 22, 2018.)

The company’s most recent quarterly report also didn’t help matters. Insys showed a 26% decline in revenue from the year before. It also registered a net loss per share of $0.28, down from $0.09 a year prior. (Source: “INSYS Therapeutics Reports First Quarter 2018 Results,” Insys Therapeutics, May 8, 2018.)

On top of all that, you have the company’s founder John Kapoor indicted for bribing doctors to prescribe fentanyl-based medications, likely contributing to the opioid epidemic in the U.S. (Source: “Ivy League Doctor Gets 4 Years in Prison for Insys Opioid Kickbacks,” Fortune, March 10, 2018.)

Legally, financially, and morally, those are all bad news for the company.

And yet, the company has performed well over the past few months.

So why is INSY stock rising?

Chart courtesy of StockCharts.com

As I said at the outset, INSY stock investors are either hating or loving the company depending on when they purchased their stake.

Year-to-date, the company is down over 20%. But over the past three months, INSY stock has risen by over 23%.

The INSY stock forecast this month is likely to see a continuation of those gains on the back of marijuana hype as investors look to gain exposure and diversification in this booming industry.

Another reason why the INSY stock forecast this month looks positive is that the company took such a hit to begin the year that its stock value fell to a bargain price, prompting investors to get back in on the action.

After all, we’ve seen this countless times before, where a company will be punished on the stock market for bad behavior only for the stock value to hit a threshold at its nadir, prompting money to pour back into the stock.

It’s a common occurrence that plays out time and again in the stock market in a variety of industries. Volkswagen AG, Facebook, Inc. (NASDAQ:FB), Valeant Pharmaceuticals Intl Inc (NYSE:VRX)—there’s a ton of examples of companies losing stock value after a scandal only to see their fortunes change rapidly a few short months later.

INSY stock appears to be following that trend.

Long-term, of course, there are far more questions surrounding INSY stock. For instance, can it get its cannabis-derived products to market? Will more scandals crop up? Can it keep this momentum going?

One of the few positive stories to come out of Insys this year is that the company is distancing itself from fentanyl and instead focusing on cannabis. Fentanyl is very much in the public eye for its role in the opioid crisis. Considering Insys’ already fraught relationship with the law and public perception, refocusing on cannabis is a good move.

The company is also tapping into a very lucrative market in cannabis-based drugs. Considering the FDA recently approved the first ever cannabis-derived drug for prescription use in the U.S., the winds of change are blowing. If Insys can tap into that push, then we can expect big things from the company.

Overall, I like the outlook of INSY stock for this month and believe that, long-term, it will likely do well for itself. However, I am wary of further scandals coming out or another failed drug test derailing its progress.

Analyst Take

Insys Therapeutics has not had a quiet year.

The company has been on a wild ride in both the media and the stock market.

Numerous scandals have plagued the company and help sink its public image. Meanwhile, its founder is under indictment and it is being blamed for playing a role in the deadly opioid epidemic.

On the flip side, its fall in stock value has caused investors to reevaluate the company’s worth and once more begin pouring money into the beleaguered pharma stock. That has prompted one of the better runs and recoveries of 2018 in the marijuana industry.

For those looking to diversify their exposure to the marijuana market, INSY stock provides that option. The company is also likely to surge for a while yet after its calamitous fall to begin 2018.

But there are still a lot of question marks surrounding the company, making it one of the riskier picks in the industry.