Why Depomed Inc (DEPO) Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool’s free investing community, specialty pharmaceutical company Depomed Inc (NASDAQ:DEPO) has received an alarming two-star ranking.

With that in mind, let’s take a closer look at DepoMed and see what CAPS investors are saying about the stock right now.

DepoMed facts

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 9% of the 55 All-Star members who have rated DepoMed believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, zzlangerhans, touched on the stock’s seemingly unsustainable price run:

I think DepoMed’s resurgence since the beginning of the year owes more to current biotech small cap froth than it does to a serious run-up ahead of the FDA Ad Comm for Serada scheduled for March 4. …

The Ad Comm will certainly dominate the short-term behavior of the stock. Of course, there’s the actual PDUFA date May 31 which will have to be taken into account if Serada squeaks by the Ad Comm. Gralise has shown a little life, but nothing to convince me that it will ever generate significant positive cash flow. The company has been doing a nice job growing Glumetza royalties, but I don’t see how much further that can go. I think Zipsor will ultimately prove to be a dead end as well. Phase II data for DM-1992 in Parkinson’s was weak. If Serada gets buried, DepoMed will have a hard time convincing the street that they have a future.

The article Why DepoMed Is Poised to Pull Back originally appeared on Fool.com and is written by Brian D. Pacampara.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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