The average target price of FENC is 13 and suggests 54% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 15.0. This translates into 84% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 10.0. This suggests 22% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Fennec Pharmaceuticals Inc. operates as a biopharmaceutical company. Its product candidate in the clinical stage of development is PEDMARK, a formulation of sodium thiosulfate for the prevention of platinum-induced ototoxicity in pediatric cancer patients. The company was formerly known as Adherex Technologies Inc. and changed its name to Fennec Pharmaceuticals Inc. in September 2014. Fennec Pharmaceuticals Inc. was incorporated in 1996 and is based in Research Triangle Park, North Carolina.

Fennec Pharmaceuticals Inc.

Healthcare

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

FENC reported revenue of USD 31mn in the last 12 months, down 35% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 918 734 323 983 581 184% from FY24 to USD -0.51. Market expects EPS to reach USD -0.07 in FY25.

The stock has been growing steadily in the past six months, adding 79% in total. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 87ppts in total. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -35.2% in the last 12 months, a decline from 7.6% in FY23. 

Historically, FENC has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -45.5%, down from -0.9% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -38.5% in the last 12 months, a decrease from -1.6% in FY23. The market analysts predict that RoA will be -0.2% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to -49.2%, below the peers. The consensus estimate for FY24 for RoCE is 1.8%, again behind the peers. 

Fennec Pharmaceuticals Inc. reported a return on equity (RoE) of 310.2% in the last 12 months, up from 3.8% in FY23. The market consensus projects an RoE of 0.5% in FY24, however, this time below its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -12.8 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

FENC has below average trading liquidity. The average private investor can sell his common position in the stock in a single trading day under normal market conditions. Liquidity is usually stable and is average on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to bleak profitability, negligible return on capital, poor working capital management, inadequate interest coverage, poor cash flow generation, and an unfavourable capital structure. We note resilient historical revenue growth and low margin volatility, among the positive credit factors. 

In highly turbulent market conditions, FENC is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, FENC is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from significant to immense. 

Considering past and projected metrics, the stock is distinctly 'expensive' compared to its peers. In particular, the stock is overpriced on P/E. 

Fennec Pharmaceuticals Inc.

$ 8.17

3

Fennec Pharmaceuticals Inc.

$ 8.17

3

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Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 8.17

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