Have you been paying attention to shares of Catalyst Pharmaceutical (CPRX)? Shares have been on the move with the stock up 13.7% over the past month. The stock hit a new 52-week high of $23.12 in the previous session. Catalyst Pharmaceutical has gained 35.1% since the start of the year compared to the 3.2% move for the Zacks Medical sector and the -2.8% return for the Zacks Medical - Drugs industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 6, 2024, Catalyst reported EPS of $0.57 versus consensus estimate of $0.49 while it beat the consensus revenue estimate by 4.65%.

For the current fiscal year, Catalyst is expected to post earnings of $1.92 per share on $472.59 million in revenues. This represents a -2.04% change in EPS on a 18.68% change in revenues. For the next fiscal year, the company is expected to earn $2.27 per share on $558.33 million in revenues. This represents a year-over-year change of 18.54% and 18.14%, respectively.

Valuation Metrics

Catalyst may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Catalyst has a Value Score of B. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 11.8X current fiscal year EPS estimates, which is not in-line with the peer industry average of 17.1X. On a trailing cash flow basis, the stock currently trades at 11X versus its peer group's average of 9.2X. Additionally, the stock has a PEG ratio of 3.43. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Catalyst currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Catalyst passes the test. Thus, it seems as though Catalyst shares could have potential in the weeks and months to come.

How Does CPRX Stack Up to the Competition?

Shares of CPRX have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Corcept Therapeutics Incorporated (CORT). CORT has a Zacks Rank of # 1 (Strong Buy) and a Value Score of D, a Growth Score of B, and a Momentum Score of B.

Earnings were strong last quarter. Corcept Therapeutics Incorporated beat our consensus estimate by 51.85%, and for the current fiscal year, CORT is expected to post earnings of $1.83 per share on revenue of $683.78 million.

Shares of Corcept Therapeutics Incorporated have gained 18.1% over the past month, and currently trade at a forward P/E of 41.52X and a P/CF of 56.62X.

The Medical - Drugs industry is in the top 33% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CPRX and CORT, even beyond their own solid fundamental situation.

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