Elite Pharmaceuticals Inc (ELTP)

[jour_trader]

The stock market is forward looking. A company can have a stellar financial quarter, but the stock price drop on tighter margins, competitive pressure, etc. The market is saying that there isn’t a strong liking towards giving Elite favorable forward looking multiple based on future potential.

Elite is currently not far from being a one trick pony with Adderall holding up the fort. Majority of revenue coming from one sales distributor. Lots of risk and no pipeline movement for almost 2 years now. If that’s not maintaining status quo, I’m not sure what is. Adderall ER sales are poor at best. We have no idea what else the company is working on and likelihood of execution. Could be several drugs akin to Loxapine for all we know.

Elite’s history of investments haven’t gone well. Several ANDAs sold off for fraction of investment andafter pumping millions into SequestOx the tech has failed. I see very few reasons why a larger multiple should be given to Elite due to their history, current risk profile and future revenue and profitability outlook. Using an industry average forward multiple simply can’t be justified. Stock price will continue to feel pressure as it has for several years due to lack of execution. Stock price has it all built in. No manipulation, but some want you to buy into that story.