Pharmaceuticals company Acrux Limited (ASX: ACR) has found itself back in favour today with its shares skyrocketing 11c or 11% by early afternoon. Now trading at $1.12, the shares have skyrocketed nearly 49% in the last two-and-a-half weeks after sinking as low as 75c.
Despite the stock's recent rally however, Acrux shares remain down 67.5% over the last 12 months when they traded at a price of $3.43 each. By comparison, the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has risen 16.8% in the same time.
Acrux has been under enormous pressure with the US Food and Drug Administration (FDA) investigating a possible link between testosterone treatments like those product developed by Acrux and an increased risk of cardiovascular events or strokes. This led to Acrux announcing in April that it may not receive a US$50 million milestone payment this year, which has also had a huge effect on the shares' performance.
Unfortunately, investors will have to wait until the figures are released for Q2 2014 to show the extent to which the announcement of possible health implications may have had on sales. However, with the stock trading on a projected P/E ratio of roughly 5.6 and with a forecast dividend yield of 6.7%, investors may still be attracted to the business' long-term prospects.
Of course, if there is no proof to suggest that the link between the product and health risks actually exists, the gains that may be realised from Acrux's shares could be enormous…
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