Why MannKind Corporation Stock Is Jumping Today

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What happened

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Shares of MannKind Corp. (NASDAQ: MNKD) are on the move yet again today following an upgrade by H.C. Wainwright. The firm raised its 12-month price target for the stock to $12 this morning, implying a 31% upside potential from where it closed yesterday.

As of 10:51 a.m. EDT, MannKind's shares are up 20.83% on the back of this positive coverage by H.C. Wainwright, and have now appreciated by a whopping 175% less than two weeks into October.  

So what

MannKind is finally starting to get some respect from Wall Street analysts after the U.S. Food and Drug Administration revised the label of the company's inhaled insulin product, Afrezza, and management successfully executed a common stock for warrant exchange that provided MannKind with some much-needed wiggle room on the financial front.

Long story short, investors and a handful of analysts now seem to think these two key factors may be enough to spark the biotech's rise from the ashes. MannKind, after all, appeared destined to go bankrupt not that long ago as a result of Afrezza's faltering commercial launch. 

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Now what

Although analyst upgrades and a surging share price are nice, the ultimate test of MannKind's ability to deliver sustainable returns on capital for investors is yet to come. In short, Afrezza's friendlier label needs to translate into a massive uptick in sales and, unfortunately, this pivotal event needs to happen sooner than later in light of the company's precarious financial position. Afrezza's rather lengthy development and its subsequent anemic launch have weakened MannKind's balance sheet to the point where bankruptcy seemed inevitable just a few weeks ago.

The good news is that the early script numbers for the third quarter are reportedly on track to be some of the best yet since Afrezza's launch. While these numbers do need to be verified by the company when it reports Q3 earnings, the initial reports at least suggest that Afrezza may indeed be gaining traction in the marketplace after an extremely rocky start. 

The bottom line is that MannKind's fundamentals need to improve dramatically in order for its comeback story to ultimately have a happy ending. Until then, this speculative biotech stock is probably only suited for ultra-aggressive investors who are comfortable with elevated levels of risk. 

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George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.