Thesis (TL;DR)
$HRMY looks fundamentally cheap (P/E ~8.7, fwd P/E ~6.7, EV/EBITDA ~4.8) with high margins (GM ~75%, Op margin ~29%), strong cash (cash/sh ~$9.8), low leverage (Debt/Equity ~0.27) and 80% institutional ownership.
The stock is technically washed-out (RSI ~25, 52-week low $26.26, down ~-25% M/M) after a Phase 3 setback in Fragile X, but the core WAKIX franchise remains intact and expanding (recent PWS nod). The setup is a fundamentals-vs-fear dislocation near multi-year value.
Bottom line: Attractive asymmetric long if $26 holds, with defined risk. Expect volatility (short interest ~8.5%).
Fundamentals — Why It’s Interesting
- Profitable small-cap biotech: TTM revenue ~$772M, net margin ~23%, ROE ~27.6%, ROIC ~19.5%. That’s rare in SMID biotech.
- Cash-generative: P/FCF ~6.0, giving room for BD, pipeline, buybacks, or shocks.
- Pipeline/catalysts mixed, not broken: Fragile X miss hit sentiment; however, WAKIX label and additional indications keep the cash engine running. Recent PWS approval increases TAM.
- Valuation vs peers: At ~2.0x P/S and single-digit P/E, $HRMY trades below many profitable neuro / rare-disease comps despite similar or better margins.
- Ownership: ~80.5% institutional; insiders ~13.5%—aligned, but note insider sales cadence typical around vesting windows.
Risks: regulatory outcomes, product concentration around WAKIX, litigation/IP overhangs (though settlement improved the posture), and execution on label expansions. If pricing pressure or payer pushback rises, multiples can stay depressed.
Technicals — Where We Are
- Trend: Price ~$26.8; 52-w low $26.26. Below all key SMAs (SMA20/50/200 negative), RSI (14) ~24.9 = oversold.
- Support: $26.3 (52w low), $25.0 psych.
- Resistance: $29.5–30 (gap/fair-value pocket), $33 (prior analyst clustering), $36–37 (post-gap supply).
- Structure: Capitulation-like slide after trial headline; room for a mean-reversion bounce if $26–25 holds.
Trade Plan (Swing & Core)
Entry Zone
- Tiered buys:
- Starter near $26.8–27.2 (current).
- Add on flush $25.5–26.0 if tests hold.
- Avoid chasing green candles into $30 without a base.
Invalidation / Stop-Loss
- Hard stop: $24.90 (clean break below $25 and the 52-w low structure).
- Conservative alternative if volatility high: $23.80 (weekly close basis).
Targets
- Short term (2–6 weeks): $30–32 (first supply / gap).
- Medium term (2–4 months): $36–38 (pre-selloff shelf).
- Long term (6–12+ months): $44–48 (aligns with consensus TP ~44.6; multiple re-rating if execution holds).
Position Sizing
- Risk ≤ 1–1.5% of portfolio on the stop distance ($26.8 → $24.9 ≈ $1.9 risk).
- Use 2–3 tranches to improve average.
Optional Overlay
- Bullish call spread (3–4 months): buy $30C / sell $40C on weakness to express a bounce + re-rating without full delta risk.
- Covered calls near $33–35 once price bases above $30 to harvest IV.
What Could Go Right / Wrong
Upside drivers
- Street rotates back to profitables in biotech SMID; valuation gap closes.
- Stronger WAKIX trends and new indication uptake (PWS) → beats/raises.
- Any pipeline win or BD adds optionality.
- Short squeeze fuel (short ~8.5%) if price reclaims $30–33.
Downside catalysts
- Further pipeline disappointments or payer headwinds.
- Break $25 on volume → momentum sellers target low-$20s.
- Macro risk-off; small-cap healthcare de-rating persists.
Execution Notes for Subscribers
- If $26.3 holds and intraday reclaim shows up, initiate starter; target trim into $29.5–30 (+10% move).
- On any dip to $25.5–26.0 that quickly reclaims $26, add second tranche.
- Move stop to breakeven on a daily close above $30; let runners target $33–38.
- If $24.9 breaks and closes below, exit—reassess near $22–23 value zone.
Verdict
$HRMY is a quality, cash-flowing neuro name temporarily punished by a binary headline. With valuation support, oversold technicals, and a still-compelling commercial base, risk/reward favors measured long exposure—as long as $25 holds.
Plan: Long with $24.90 stop, scale out $30–32 / $36–38 / $44–48.
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