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What Is Amyris (AMRS), And Why Is Its Stock Soaring?

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Shares of bioscience firm Amyris skyrocketed more than 70% on Tuesday after the company announced a collaboration deal focused on developing, licensing, and commercializing cannabinoid products.

A press release from Amyris claims that the deal is valued at up to $255 million. Its partner in the collaboration was described as “confidential” and has not been revealed. The $255 million in payments apparently includes “an upfront payment” and a remainder that’s “linked to milestones that are expected over the next 12-36 months following the signing of a definitive final agreement.”

In other words, Amyris’ deal is not yet finalized, and the dollar value of the payments it is subject to receive could change. Moreover, the party that would be making said payments remains a mystery to investors. But a binding term sheet—and the allure of another major CBD deal—was enough to send the stock skyrocketing today.

Amyris describes itself as “an integrated renewable products company that is enabling the world’s leading brands to achieve sustainable growth” on its company website. It uses microorganisms, primarily yeast, to convert plant-based sugars into specific target molecules.

These molecules are then used as renewable raw materials in products in markets such as chemicals, fragrance ingredients, and cosmetic emollients. Amyris said that its new cannabinoid will leverage this process.

The company also noted that it expects a final agreement to be reached by March, with commercialization of products expected to come within 18 to 24 months after that, so long as it receives appropriate regulatory approvals.

“We are pleased to have been recognized by a well-capitalized partner as the company best suited to leverage fermentation-based technology in the production of the best quality and lowest cost and sustainably-produced cannabinoids,” said Amyris CEO John Melo.

Prior to Tuesday’s trading, AMRS shares were down more than 65% from their 52-week high reached in early October. The stock has gained a solid chunk of that back today but remains roughly 38% off its one-year peak.

The two analysts following AMRS polled by Zacks Investment Research expect the company to record revenue of $237.5 million in 2019, up nearly 47% year over year. Our data includes just one estimate for earnings, which is currently calling for a full-year loss of $0.19 per share in 2019. Investors should keep an eye on these estimates, as they could be revised higher based on the nature of this CBD deal.

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