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Is GW Pharmaceuticals (GWPH) a Buy Before it Reports Earnings?

Earlier this week, an H.C. Wainwright analyst initiated coverage of GW Pharmaceuticals (GWPH), adding to the buzz already surrounding this increasingly popular cannabis stock. On Wednesday, H.C. Wainwright analyst Douglas Tsao initiated coverage, giving the stock a "Buy" rating and $170 price target. In a note to investors, Tsao said that he expects GWPH stock to move higher as its quarterly results demonstrate that Epidiolex's launch is sustainable. Additionally, he believes that dose titration and penetration into off-label patient populations "should fuel growth and offer a bridge" to the anticipated label expansion into the tuberous sclerosis complex by mid-2020. In GW Pharmaceuticals' most recent earnings release, the company surprised investors by posting a positive earnings of 64.9%. GWPH has exceeded industry expectations in each of the most recent four quarters, with an average positive earnings of 26.7%. GWPH stock has increased 20.94% in the past month, which has outpaced both the Medical sector's gain of 3.22% and the S&P 500's gain of 2.66%, during the same period. How GWPH got to where it is now GW Pharmaceuticals first commercially launched Epidolex in the United States last November. Epidolex is the first cannabis-derived drug for patients with Lennox-Gastaut syndrome (LGS) and Dravet syndrome. And while GWPH was not immune to the boom and bust cycle that ravaged cannabis stocks between the spring and fall of this year, GW Pharmaceuticals seems to be rebounding nicely compared to its industry peers. Throughout the past few months, the company has experienced an increase in receptiveness and demand for Epidolex in the United States, as more and more physicians are recommending the drug in their prescriptions.  Investors anticipate a growing level of market penetration from the third quarter as well. They attribute this to market research conducted on Epidiolex during the second quarter, which seemed to drive awareness for LGS and Dravet, meaning that Epidiolex's third quarter sales are likely to have gained courtesy of more prescriptions.  GW Pharmaceuticals' focus has been on making Epidiolex a leading brand for epilepsy treatment. Adding to the company's success in this regard, the European Commission recently approved the marketing authorization of Epidiolex for patients aged 2 years and older. This too, is anticipated to help the company's third quarter results. As far as coverage determination is concerned, GWPH has been increasing payor access for some time now. Investors anticipate that this will also continue in the third quarter. Many investors anticipate that GW Pharmaceuticals' Q3 earnings should reflect the expansion of the Epidiolex label to TSC on a favorable outcome of Phase 3 trial data for Epidiolex, and the treatment of seizures associated with tuberous sclerosis complex. Another one of GWPH's cannabis-derived drugs that's been rising in popularity is Sativex, which is used to treat muscle spasms. Expect a reflection on this drug's performance in the upcoming earnings report. GW Pharmaceuticals also has a CBDV program that's been performing well. One can expect more news on this in the upcoming report. Keep an eye out for the Q3 earnings release due next week on November 5, 2019.
GW Pharmaceuticals PLC ADR (GWPH) was unchanged in after-hours trading Friday. Year-to-date, GWPH has declined N/A%, versus a 15.18% rise in the benchmark S&P 500 index during the same period.

About the Author: Eric Bowler

eric-bowlerEric Bowler is an accomplished journalist providing in-depth insights for more than two decades. Over the past several years his focus has been on the marijuana industry, with a special interest in cannabis growth stocks. His daily coverage of the industry keeps him on top of the key trends with the goal of helping investors make well-informed decisions.
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