It has been clear that the biggest and best, embrace this big theme, and have been aggressively positioning to take advantage of the very bullish proposed policy tailwinds for stocks, which are: 1) a corporate tax rate cut, which will go right to the bottom line for profitable companies.

Yesterday we got a look under the hood of the portfolios of the biggest money managers in the world, via their 13F filings (required quarterly portfolio disclosures to the SEC). Mark Hake writes about personal finance on and runs the Total Yield Value Guide which you can review here. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines. Hake held a long position in SAVA but not in any other security (directly or indirectly) mentioned in the article. Just keep in mind that this stock will be highly volatile.

That is a decent expected return for most investors. The implied ER or upside for SAVA stock is 67.85%. Of course, this gives no value to the ongoing research and even to the value of SavaDx, the company’s blood-based diagnostic test. Now adding the two weighted average components results in a probability-weighted price of $78.05 (i.e., $74.57 + 3.48). Now assuming the shorts are right, their weighted component value is $3.48 per share.

What is the expected return (ER)?įirst, if we multiply 0.50 times $149.11, the analyst weighted price component of the total value is $74.57. Let’s also assume that there is a 50% chance that the company is worthless, except for its cash per share, or about $6.95 per share ($278m/40m shares). For example, let’s assume that there is a 50% chance that analysts are right and the stock will hit $149.11 sometime in the next 12 months. One method I have used with binary situations like this in the past is to derive a probability-weighted price target. Using Probability Analysis for SAVA Stock If there is fraud in the results presentations, one wonders, why would the company be pressing to start Phase 3 trials? In addition, why hasn’t management taken down the huge potential payments they could have when the stock was higher? These points lead one to believe that there is still likely some upside in the stock, assuming that the remaining Phase 2 and upcoming Phase 3 results are positive. the shorts’ claims that the stock is worthless almost make this a binary play. We can use this to calculate its expected return. The average of all three surveys is $149.11. Yahoo! Finance, which uses Refinitiv survey data, reports that four analysts have an average $159.25 price target. Moreover, Seeking Alpha indicates that the average price of its survey of three analysts covering SAVA stock is $140.67. This ranges from a low of $100 to a high of $215.00 per share. They saw little reason that the FDA would pull the company’s applications to begin Phase 3 clinical trials, as some shorts have tried to get done.Īs of today, indicates that the average price target of five analysts covering the stock is $147.40.

Riley analyst lowered their price target to $108 from $145 due to the stock’s “elevated risks.” The analyst kept their Buy rating on the stock. Seeing a Binary Trade with SAVA StockĪnalysts are still positive on SAVA stock, although some have lowered their price targets. However, I believe that on balance, given good results, especially cognition results, the probabilities provide potential upside for SAVA stock. The company is also planning on conducting a placebo-controlled Cognition Maintenance Study (CMS) in Alzheimer’s patients.Įvery one of these study results could end up spiking or pushing lower SAVA stock. The purpose of the studies are to test its efficacy in AD patients. As Cassava Sciences had over $278 million on its balance sheet as of June 30, I don’t foresee any issues in terms of launching the first several of these Phase trials. In addition, the company reports that its Phase 3 clinical trials protocols have been approved by the FDA. But I suspect that the company is reviewing its presentation of those results in order to stand up to further scrutiny. Originally the company was going to release these Phase 2 results in September. For example, the company plans on releasing the 12-month results of the first 50 patients to complete 12 months of using Simufilam. Of the slide deck shows that Cassava Sciences has four upcoming events that can act as trigger points for SAVA stock.

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