Last Updated: 16 Sep 2024
Executive Summary
Scholar Rock Holding Corp (SRRK) is a clinical-phase biopharmaceutical company focused on developing drugs for serious diseases involving protein growth factor signaling. Despite a strong analyst consensus of "Buy," the company faces challenges in profitability and revenue generation. With a market capitalization of $685.87 million, SRRK has a trailing twelve months (TTM) revenue of $0 and a diluted EPS of -$2.22. The stock is currently trading at $8.57, below the analyst target price of $27.86.
Company Overview
Scholar Rock Holding Corp was founded in 2008 and is headquartered in Cambridge, Massachusetts. The company's pipeline includes treatments for fibrotic diseases, cancer, and neuromuscular disorders. SRRK has collaborations with pharmaceutical giants such as Eli Lilly and Company and Novartis.
Fundamental Analysis
Financial Performance: SRRK is yet to generate revenue and has consistently reported losses. In the TTM, the company's EBITDA was -$207.14 million, and its diluted EPS was -$2.22.
Profitability: The company has negative profit margins, operating margins, return on assets, and return on equity.
Valuation: SRRK's price-to-sales ratio is 13.14, and its price-to-book ratio is 5.13. Both ratios indicate that the stock may be overvalued.
Technical Analysis
Trend: SRRK is currently in a downtrend, trading below its 50-day and 200-day moving averages.
Support and Resistance: The stock has support at $6.03 (52-week low) and resistance at $21.17 (52-week high).
Momentum Indicators: The relative strength index (RSI) is below 30, indicating oversold conditions.
Short Term Outlook
In the short term, SRRK's stock price is likely to remain volatile due to its weak financial performance and overvaluation. The stock could test its support level at $6.03.
Long Term Outlook
The long-term outlook for SRRK depends on the success of its clinical trials and its ability to generate revenue. If the company can successfully commercialize its drugs, it has the potential for significant growth. However, the competitive nature of the biopharmaceutical industry and the company's lack of profitability pose challenges.
Analyst Recommendations
Analysts have a consensus rating of "Buy" for SRRK, with a target price of $27.86. Three analysts recommend a "Strong Buy," six recommend a "Buy," and none recommend a "Hold," "Sell," or "Strong Sell."
