I have my eyes open for recovery stocks for 2021, and Indivior (LSE: INDV) has come storming into view. The FTSE 250 as a whole is sitting on a 6% loss over the past 12 months. But the Indivior share price has jumped by more than 250% in the same period.
It’s still way down on a 2018 peak, with the shares going into tailspin in 2019. But what’s this new lease of life all about? And are we looking at long-term sustainable growth? The surge of the past few days is down to the company’s latest update.
Indivior is a pharmaceuticals company, specialising in opioid addiction treatment. The tragic opioid addiction crisis is big, especially in the USA. Sad though that is, any improvements in 2020’s profit outlook is good news for the firm. And that’s exactly what it delivered on 15 January. I could tell it was good just by looking at the Indivior share price, which jumped nearly 10% on the day.
Indivior share price soaring
My Motley Fool colleague Manika Premsingh made a prediction: “I reckon that the latest news will provide continued impetus for INDV’s share price.” And how prescient that seems now. On Tuesday, it leads the FTSE 250 again, up another 9% at the time of writing. After a solid Monday too, the Indivior share price has now climbed 24% since the update was released.
Indivior had previously indicated full-year revenue in the range of $595m to $620m. The results have easily exceeded that, with new expectations put at $645m to $650m. The company’s Sublocade product plays a big part in that, with net revenue now expected to come in between $128m and $130m (up from guidance of $120m to $125m). Other product revenue looks to be largely in line with guidance.
On top of better-than-expected revenue, Indivior reported operating expenses slightly below guidance. Overall, the company “now expects to deliver adjusted pre-tax income ahead of its previous expectations.” Quite how far ahead we don’t yet know, so we’ll have to wait until full results are delivered on 18 February.
Should I buy now?
This all sounds good. But with the Indivior share price having more than trebled over the past year, would I buy now? Well, my portfolio might benefit from a growth stock or two. As far as future demand goes, I can’t see an end to the opioid crisis any time soon. Not when the majority of drugs-related deaths around the world are down to opioids.
But I remain cautious for several reasons. One is that Indivior’s results have been a bit erratic. And I really like to see at least a slightly longer-term positive run before I buy a stock. The other is a £1bn claim brought against the company in November, by former parent Reckitt Benckiser.
Indivior reckons the claim is baseless, but I’d rather wait and see. I might be missing some top growth profits by turning away from the Indivior share price right now. But I prefer to minimise risk these days, and there are many lower-risk investment candidates out there.
