Wednesday’s TSX breakouts: This skin care company has a promising growth forecast

Today, there are 9 stocks on the positive breakouts list and 23 stocks on the negative breakouts list.

Highlighted today is Cipher Pharmaceuticals (CPH-T, CPHR-Q). A brief overview is provided below that may serve as a springboard for further research.

Mississauga-based Cipher Pharmaceuticals is a small-cap, healthcare stock that is focused on dermatology, and has a diversified pipeline of products with near-term revenue potential. Two products, Actikerall and Beteflam have both been approved by Health Canada with targeted launches in Canada targeted for the first half of this year. Actikerall is a topical solution used to treat hyperkeratotic actinic keratosis of the face, forehead and scalp in adult patients, or layman words, a pre-cancerous patch of thick, scaly, or crusty skin. Beteflam is used to treat mild to moderate plaque psoriasis of the elbows and knees in adult patients. Management's objective is to increase its portfolio from four products to 20 products and product candidates.

Dividend policy

Management is focused on growth and currently does not pay shareholders a dividend.

Analysts' recommendations

According to Bloomberg, there are four analysts covering this company, all of whom have buy recommendations. Price targets vary widely, but all are considerable higher than the current stock price, suggesting strong potential gains. For instance, one analyst has a price target of $8.50 (U.S.), while another has a price target of $13.25 (U.S.)

Growth is anticipated to accelerate in 2017 as the company slowly builds out its pipeline of product offerings. The consensus sales forecast is $33-million (U.S.) in 2015, rising to $43-million in 2016 and $56- million in 2017. The consensus earnings before interest, taxes, depreciation and amortization (EBITDA) estimate is $10-million in 2015, increasing to $11-million in 2016, and jumping to $22-million in 2017. The consensus earnings per share estimate is 5 cents in 2015, holding steady at 4 cents in 2016, but rising to 28 cents in 2017.

Technical analysis

Despite the positive price breakout, the stock chart still appears unattractive, with the 50-day moving average trading below the 200-day moving average and the stock price trading between these average. Generally, you want to see the price trading above both of these moving averages, both moving averages rising, and the 50-day moving average trading above the 200-day moving average.

In 2015, the stock price collapsed 61 per cent to $6.49 from $16.75. However, the stock price is up 35 per cent from its 2015 low of $4.81 set on September 28.

The stock has initial downside support just below $6 with its 50-day moving average is at $5.88.

The small-cap stock can be thinly traded, and as a result, can be volatile. The average daily trading volume over the past two months is over 57,000 shares.

As always, I strongly encourage readers to consult a financial adviser, and to do their own proper due diligence before taking any investment action.

Below is a list of stocks in the S&P/TSX composite index and the S&P/TSX Small Cap index that are technically breaking out, reaching new 55-day highs or lows.