I'm Totally 'Rev'd' Up About This Small-Cap Stock (Also a Palantir Reminder)
James 'Rev Shark' DePorre's pick popped for a gain of over 75% on good news, so let's take a look.
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Maybe you've seen the news. A favorite stock of TheStreet Pro's very own James "Rev Shark" DePorre, Humacyte Inc. HUMA, has popped for a gain of more than 75% in early Friday trading ... with U.S. equity index futures markets trading in the hole. The bioengineered tissue maker announced Food and Drug Administration approval of its Symvess product, which is an off the shelf, implantable vascular conduit for arterial injuries. I'd love to take some credit for this one as I am long a small amount of shares, but the credit goes to the Rev as I only even entertained initiating the stock due to his words and his articles.
The news actually broke late Thursday. Symvess received full approval from the FDA in the U.S. for use in adults suffering arterial injury in extremities when urgent revascularization is necessary to avoid limb loss and vein graft is not a feasible option. Clinical tests had shown that Symvess had high rates of unobstructed blood flow and low rates of amputation and infection.
In anticipation of this approval, Humacyte has recruited a sales team ahead of the commercial launch of Symvess. Away from Symvess, Humacyte has also reported promising results from clinical trials for the firm's acellular tissue engineered vessel (ATEV). ATEV is currently under FDA review for use in vascular trauma cases and could possibly be more effective than synthetic grafts in the provision of care.
Recent Past
On Nov. 8, Humacyte posted an adjusted third quarter loss per share of $0.26 (unadjusted loss per share of $0.33) on no revenue. Not a misprint. In fact, the company has not reported revenue since 2022 and priced 2.81 million shares in a direct offering on Nov. 14 at $5.34. (The stock closed on Thursday night at $3.46) It also sold 1.4 million warrants at that time that could be exercised at $5.34 that expire 180 days after issuance. Gross proceeds from the sales injected the firm with a rough $15 million in proceeds.
For the past 12 months as of those third-quarter earnings, the company burned $90.6 million in operating cash flow and another $1.7 million in capital spending. That left $20.6 million in cash on the balance sheet, hence the need to raise some dough in November. Humacyte has some leases, but no shorter-term debt, so it can spend slowly while heading into the commercial launch of the new product, at least there should be no pressure to service any debt maturing within 12 months.
That said, the company does have a long-term debt-load of $62.4 million, so the cash register does have to start ringing. It is projected to generate revenue of $215,000 for the current quarter and a rough $14 million for the coming fiscal year, so there's not a lot of wiggle room unless those numbers can be ramped higher.
This Morning's Rating
Vernon Bernard, a four-star rated (by TipRanks) analyst at HC Wainwright, who has a "buy" rating on HUMA, increased his target price from $12 to $15. I am still waiting to hear something from Josh Jennings of TD Cowen, another 4-star analyst who has a positive view of HUMA and at least has a $10 target price.
Trading
I am tempted to take profits on this trade as it is for me just a trade. The stock took off before my position was large enough to be an investment. If my position was larger, I would definitely have something. That said, overall, it appears that things are looking better for this firm now that this key approval is behind them.
Readers will see that HUMA will very likely this morning break out of a downtrend in place since early August. Should the stock hold its 200-day simple moving average at $5.50, that would go a long way towards attracting larger investors.
Don't Forget (Palantir)
My dear team of Palantir Technologies PLTR loyalists. Keep in mind that PLTR will be added to the Nasdaq 100 index over the weekend. If one were looking to make a sale, doing something on or close to the closing bell might in theory get a better price as there could be an institutional push into the stock that may or may not last into the early part of next week. Don't worry, my legions of PLTR faithful, I still have a $90 target price, which as far as I know is still the high PLTR target on Wall Street.
At the time of publication, Guilfoyle was long HUMA, PLTR equity.
