Is It Time to Sell Portola?

After the biopharma's 45% pop, many investors are wondering if maybe now is the time to cash out of this volatile stock.

Motley Fool Staff
Motley Fool Staff
Jul 14, 2017 at 7:19AM
Health Care

Portola Pharmaceuticals' (NASDAQ:PTLA) stock recently jumped 45% on the news that it won its first FDA approval.

In this segment of Industry Focus: Healthcare, Motley Fool analyst Kristine Harjes and contributor Todd Campbell explain why investors might want to stick with the company rather than cash out now, and some important things to remember about investing in any biotech.

A full transcript follows the video.

This video was recorded on June 28, 2017.

Kristine Harjes: I think the big question here, and this is the root of most of the listener questions that we've gotten, between the Twitter and the Facebook group and writing in to industryfocus@fool.com -- you guys want to know what we're doing now. Are we taking some profits off the table? Todd and I are both shareholders. Personally, I'm not. I want to wait it out. This is a very exciting time to be a shareholder in this company. Of course, it still comes with risks, even though they've now crossed the line to becoming a commercial-stage company. You could still see the stock suffer pretty dramatically if, say, AndexXa doesn't get approved. What do you think, Todd?

Todd Campbell: Right. This thing had, what, a 45% pop on the day of the approval? Some gap and fill is to be expected.

Harjes: And it's still a $3 billion company. That's pretty small.

Campbell: Yeah. It's not like Kristine and I are expecting another 40% pop next month. I'm going to stick with this stock. I'm riding it out. Assuming you've got $1 billion, $3 billion in revenue a couple years out, I wouldn't be shocked by a $5 [billion]-$6 billion market cap on this company. And in a takeout situation, which, again, who knows, never buy a stock because it could become a target of another company, but maybe that increases the valuation to $7 [billion]-$8 billion. Time will tell.