Shares of synthetic-biology leader Intrexon (NASDAQ:XON) soared 34% in July. What happened?
Intrexon stock started the month at $47 per share, but several recent analyst upgrades pushed shares higher. Investment analysts at Wunderlich initiated coverage on June 9 and placed a $55 price target on shares, which represented a nearly 20% premium at the time. But in late July, Wunderlich increased its price target to $70 per share, which pushed Intrexon up 11% in a single day and past a $6 billion market cap for the first time ever. The company ended July with a $7.1 billion market cap.
Few companies are growing as quickly as Intrexon, so the analyst upgrades carry some weight. Total revenue rose to $33.8 million in the first quarter 2015 compared to just $7.8 million in the prior-year period. Management sees no sign of slowing growth for the foreseeable future.
Intrexon also has many potential growth catalysts spread across a diverse range of operations and industries. For instance, its healthcare portfolio continues to gain momentum, its bovine reproductive-technology platform could generate over $100 million in 2015, its engineered-seafood subsidiary AquaBounty is getting ready for an IPO, and pilot operations will soon begin for its energy segment. Both the pace of developments and the potential for growth are astonishing.
Intrexon stock now sits at all-time highs. While I think much of that share-price gain is derived from the intangible potential of the company's young healthcare business (which is fueled by the current biotech boom), it's difficult to say that growth in other areas doesn't justify the gains. Either way, I'm done saying shares are overvalued. In fact, if they pull back from recent highs, I'll certainly consider starting a position.