Ardelyx stock: Is ARDX a good buy after the 1,360% surge?

Ardelyx (NASDAQ: ARDX) stock price has been in an unstoppable bull run as investors cheered the company’s pipeline and moves by the FDA. The stock soared by over 30% on Monday and 4% in the pre-market session on Tuesday. In all, it has risen by 200% in the past 12 months and by 1,368% from its lowest point in 2022, giving it a market cap of over $1.9 billion.

Biotech stocks are doing well

Ardelyx is doing well as investors cheer developments in the biotech industry. Just on Tuesday, GSK announced a $1.4 billion deal to acquire Aiolos Bio while Johnson & Johnson bought Ambrx for $2 billion. 

Novartis is also acquiring Cyberkinetics while Merck bought Harpoon Therapeutics in a $680 million deal. More deals could be announced this week as a major pharmaceutical conference goes on. It is not clear whether Ardelyx will receive a bid soon.

The company is, nonetheless, doing modestly well. On Monday, Ardelyx said that its drug, Isbrela, was doing better than expected. It now expects that the drug will generate about $80 million in US sales in its full year. 

It then sees this revenue rising to between $140 million and $150 million in 2024. In all, the firm sees the drug making $1 billion in sales before its patent expires. Ibsrela is a drug that works to relieve constipation, belly pain, and bloating. It works for patients with irritable bowel syndrome.

Ardelyx stock price is also doing great after the FDA approved Xphozah, the first and only phosphate absorption inhibitor in October. The drug helps to reduce serum phosphorous in adults with chronic kidney disease on dialysis. It targets over 500k customers in the US.

Therefore, the surge is a sign that investors anticipate that the company’s growth will continue. Also, the firm has a strong balance sheet with over $165 million in cash and short-term investments. In addition to other resources, including payments from Fosun and Kwoya Kirin, the firm has over $218 million in cash. 

Ardelyx stock price forecast

ARDX chart by TradingView

Turning to the weekly chart, we see that the ARDX share price has gone parabolic in the past two years. It has moved from being a penny stock trading at $0.4930 to over $8. Most recently, the shares flipped the important resistance at $5.11 (April 17th high) into a support level.

The stock has remained above all moving averages, a bullish sign. Further, the Relative Strength Index (RSI) and the MACD have continued rising. Therefore, I suspect that the stock will continue rising as buyers target the key resistance at $9.24, its highest point in April 2021. 

The alternative scenario is where the stock pulls back in the coming weeks as investors start taking profits. Such a pullback could see it retest the support at $5.11.