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What happened

In response to receiving upbeat coverage from analysts at Cantor Fitzgerald, shares of TherapeuticsMD (NYSEMKT:TXMD) rose by as much as 11% much in early morning trading on Friday.

So what

The investment firm initiated coverage on TherapeuticsMD today, giving shares an Overweight rating. Cantor also went out on a limb and set an ultra-bullish price target of $34. For perspective, TherapetuicsMD's stock closed at $5.54 yesterday, so this implies upside of more than 500%.

Shares rallied sharply in early morning trading in response to the positive outlook.

Now what

Cantor's bullish sentiment most likely came in response to the data that was released earlier in the month from the company's Replenish trial, which was testing TX-001HR as a potenial treatment for moderate to severe vasomotor symptoms due to menopause in postmenopausal women. Data from the placebo-controlled trial showed that TX-001HR met all of its co-primary efficacy and safety endpoints, which suggests that the drug stands a good chance at winning FDA approval.

Analysts from Cantor also likely believe that Yuvvexy stands a good chance at getting the green light from regulators as a treatment for vaginal pain during sexual intercourse caused by menopause. Yuvvexy also performed well in phase 3 clinical trials, and some analysts are projecting peak sales as high as $1 billion. Thus, if the FDA gives the drug the nod on its PDUFA date, or approval deadline, of May 7, 2017, it is likely that shares will soar. 

While there are plenty of reasons to be optimistic about ThearpeteuticsMD's future, investors should remember that strong clinical results do not automatically translate into commercial success. Given that TherapeuticsMD still has plenty of hurdles to overcome in the months ahead, I think staying on the sidelines continues to be the best move to make.

Brian Feroldi has no position in any stocks mentioned. Like this article? Follow him on Twitter, where he goes by the handle @Longtermmindset, or connect with him on LinkedIn to see more articles like this.

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