Shares of British drugmaker GW Pharmaceuticals (NASDAQ:GWPH) shed an eye-catching 11.4% of their value in February, according to data from S&P Global Market Intelligence. The company took a big hit after reporting fourth-quarter and full-year results on Feb. 25, but earnings weren't the whole story behind this hefty downturn.
Specifically, GW Pharmaceuticals' stock was hammered for two interrelated reasons last month. First, the company posted a larger net loss for the fourth quarter than the prevailing consensus estimate. Second, this earnings miss couldn't have come at a worse time. The entire market was in free fall at the end of February thanks to the COVID-19 illness, and pharma stocks like GW Pharmaceuticals were some of the hardest hit by this wave of panic selling.
GW Pharmaceuticals' stock is now trading close to its three-year low following last month's downturn. Moreover, the drugmaker's shares are currently valued at just 3.9 times next year's projected sales. That's not super cheap to be sure, but it's also not a particularly pricey valuation for a rare disease play. Most of these orphan-drug companies, after all, trade at over 10 times forward-looking sales, so there's a strong case to be made here that GW is now in bargain territory.
Is it time to buy? GW Pharmaceuticals' cannabis-based epilepsy medicine Epidiolex has gotten off to a roaring start since its launch. What's more, the company is making progress on several other pipeline candidates as well. Therefore, bargain hunters may want to consider buying this beaten-down pharma stock in the wake of this February swoon.