Synergy Pharmaceuticals Inc. (NASDAQ: SGYP) had an absolutely enormous day on Wednesday. News of its constipation drug study sent shares up 68% to $7.78 on a whopping 64 million shares. 24/7 Wall St. does not ordinarily cover analyst calls on individual small-cap stocks, but a fresh report based on Wednesday’s closing price implies that Synergy shares, even after the monumental gain the prior day, could actually more than double.

Corey Davis and Lidia Liu from Canaccord Genuity already had a Buy rating on this stock. What stands out in the call is that the price target was raised to $19 from $11. If things go the way that Canaccord’s team expects, then investors could still see an implied upside of a whopping 144% or so.

Investors might also want to consider that Synergy’s highest target was the $11.00 target from Canaccord Genuity. Of the five firms that cover Synergy, Canaccord’s note sounds funny: “This thang don’t stank.”

The firm said that Synergy announced best positive top-line results it could have hoped for from the first of its two Phase 3 trials for plecanatide in chronic idiopathic constipation (CIC). They noted that both doses, the 3 mg and the 6 mg, met the primary endpoint with flying colors by demonstrating statistical significance in the percentage of durable responder patients.

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The report said:

21.0% of 3.0mg patients and 19.5% of 6.0mg-patients, compared to only 10.2% in placebo. From a commercial standpoint, the most important data was the very low diarrhea side effect rate; at 5.9% and 5.5% for 3.0mg and 6.0mg. These were roughly half of the 9.7% observed in Phase 2, and one-third of Linzess’ 16% seen in its CIC Phase 3. Therefore, with efficacy just as good and the low diarrhea rate as a clear differentiator in the marketplace, we are raising our price target as we consistently do when drugs become de-risked …

Additional drivers are that the constipation market is far larger than IBS-C — about nine times more CIC patients than IBS-C patients. Canaccord hinted at a potential acquirer and said of the expectations ahead:

We would emphasize that CIC alone is an FDA- approvable indication. Synergy plans to file the CIC NDA by year-end — even before the IBS-C data matures, but any would-be acquirer could certainly change that plan and choose to file both together.

The big call here is the scope of the drug’s potential market. Canaccord Genuity noted that plecanatide’s growth depends on who markets it. Still, the firm has stated over and over that Linzess can potentially be a $2 billion drug. The firm’s $19 valuation is derived from a discounted price-to-earnings (P/E) valuation, using a 20 multiple to its 2023 earnings per share target of $2.52, and it then discounted it back for seven years at 15%.

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24/7 Wall St. looks for competing calls to see if they line up or compete with what has been said in the most positive cases. It was reported that Cantor Fitzgerald reiterated its Buy rating and raised the price target to $14.00 from a prior $8.50 target.

UPDATE FOR CLOSING BELL: Synergy shares closed up 17.87% at $9.17, with an intraday trading range of $2.45 to $9.44. Synergy also saw 40.2 million shares trade hands versus the 64 million or so from Wednesday.

After more than an hour of trading on Thursday morning, Synergy shares were up by another 6% to $8.25 on more than 18.5 million shares with a market cap of $826 million. The stock has a 52-week range of $2.45 to $8.63. As a reminder, Synergy also has warrants that are listed as well. They trade under the tickers SGYPU and SGYPW on Nasdaq.

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