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While Wall Street cheered the Federal Reserve's decision to hold off on tapering, some investors had even bigger reasons to cheer. Here are three of the most humongous health-care stocks this week -- and what prompted their huge gains.
A bird in the hand worth four in the Wedbush
Standing atop our list this week is Omeros (NASDAQ: OMER ) . Shares of the small biopharmaceutical company skyrocketed more than 40% on a big analyst price target increase and good pipeline news.
Wedbush says Omeros is poised to hit $28 per share within a year. That's four times higher than the stock's current level -- even after the nice gains this week. Wedbush analyst Liana Moussatos thinks Omeros' eye surgery drug OMS302 could gain significantly higher market penetration than earlier thought if the drug is approved next year.
That wasn't the only good news for Omeros. The company also announced on Thursday that it has begun enrollment in a mid-stage study of schizophrenia drug OMS824. Omeros released positive results from an early stage study of OMS824 last week.
Expiration of lock-up periods after a company goes public sometimes has insiders selling shares in mass -- driving the stock down. Although the lock-up period expired for Enanta Pharmaceuticals (NASDAQ: ENTA ) this week, there certainly was no sell-off. Actually, the opposite occurred, with the stock soaring 31%.
Enanta went public back in March. Rule 144 of the Securities Act of 1933 places restrictions on insider selling until at least six months after the new security is issued. This lock-up period fell by the wayside on Tuesday. Shares of Enanta promptly went on a nice run that continued through the week.
The biotech is in partnership with AbbVie (NYSE: ABBV ) to develop protease inhibitors to fight hepatitis-C. Experimental drug ABT-450 is in a phase 3 study and was granted Breakthrough Therapy designation by the U.S. Food and Drug Administration in May. The all-oral antiviral combo from AbbVie and Enanta is considered to be one of the top prospects for treating hepatitis-C, which affects around 3.2 million Americans.
In what looks to be one of the year's best turnaround stories, pharmacy chain Rite Aid (NYSE: RAD ) posted strong second-quarter results this week. The market rewarded shareholders nicely, with Rite Aid shares jumping 30% for the week.
Wall Street expected the pharmacy chain to report a loss of $0.04 per share. Rite Aid, instead, stunned the nattering nabobs of negativity with positive earnings of $0.03 per share. Management cited a couple of factors behind the better-than-expected results: more generics helping the bottom line and keeping a lid on costs.
Helped by the solid quarter, Rite Aid raised its revenue and earnings guidance for the full 2014 fiscal year. CEO John Standley certainly appears to have the company headed in the right direction.
I like all three of this week's stocks. While some might think that Wedbush is overly optimistic on Omeros' prospects, the biopharmaceutical company does have exceptionally strong growth potential. Enanta shareholders could be in store for even better days ahead, especially if AbbVie manages to be the first to gain approval for its hep-C drug. And Rite Aid -- well, I always love a good come-from-behind story.
There are always risks, of course. Omeros could fail to get FDA approval. Rivals in the hepatitis C race could get the upper hand on AbbVie and Enanta. Rite Aid could pull back on valuation concerns. Nevertheless, all three of these are stocks that could continue to pay off for investors over the long run.
The time frame that really matters
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