What happened

Shares of Durect (NASDAQ:DRRX), a commercial-stage biopharmaceutical company with numerous drugs in development, rose as much as 12% in early morning trading on Friday. The stock was up about 10% as of 11:30 a.m. EDT.

So what

Investors can thank Elemer Piros, an analyst at Cantor Fitzgerald, for today's rise. Piros initiated coverage on Durect today and gave the stock an overweight rating. A near-term price target of $5 was also set, which is far above Thursday's closing price of $1.66.

A blue stock chart with an orange line in a zigzag pattern.

Image source: Getty Images.

Piros' rationale for the bullish rating is based on:

  • Upbeat data from its trial as a promising treatment for alcoholic hepatitis
  • The signing of a licensing agreement with Gilead Sciences
  • Several other catalysts are slated for the rest of 2019, including several data readouts

Investors are bidding up the share price in response to the upbeat commentary. 

Now what

Piros may or may not be right about the near-term price movement for Durect. However, a look at Durect's long-term history as a public company isn't pretty.

SPY Chart

SPY data by YCharts.

Durect might finally be at a turning point, but I'm a firm believer that winners tend to keep on winning and losers are liable to continue losing. There's no doubt that Durect has been a massive loser for investors so far, so I wouldn't be tempted at all to buy shares today. Instead, I'm content to focus my time and capital on other healthcare stocks that have a better track record of success.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.