What happened?

Shares of Ovid Therapeutics (NASDAQ:OVID), a small-cap biopharmaceutical company, were up by 29.1% as of 12:51 p.m. EDT on Thursday, despite the company not reporting any news. The market is probably reacting to Ovid getting a buy rating from an analyst. 

So what

Michael Higgins, an analyst with Ladenburg Thalmann, reiterated a buy rating on Ovid's stock today. What's more, Higgins gave Ovid a price target of $20, which represents a significant upside from the company's previous close of $5.43. So it isn't surprising that investors rushed to purchase Ovid's stock, sending shares significantly higher. As of this writing, Ovid's stock is worth about $7.05.

Hand drawing an upward pointing graph on a board.

Image source: Getty Images.

Now what

It's important to take analyst recommendations with a grain of salt. Ovid currently has no products on the market and doesn't generate any revenue. The company does have several interesting pipeline candidates, however. In particular, Ovid's OV101 is an investigational treatment for a rare disorder called Angelman syndrome. This condition, usually diagnosed at an early age, causes such problems as delayed development, intellectual disability, severe speech impairment, and problems with movement and balance, among others.

There are currently no approved therapies for Angelman syndrome, and patients require intensive care. If OV101 turns out to be an effective treatment, not only will it be great news for Angelman sufferers and their families, but it could also be a lucrative opportunity for the company. In short, investors will want to keep a close eye on this healthcare stock.

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.