Could a small clinical-stage emerging pharmaceuticals outfit named Paratek Pharmaceuticals Inc. (NASDAQ: PRTK) have upside of almost 200%? That’s what one firm has published on the first trading day of 2019. While small biotech companies can sometimes feel like they are based on limitless hope, Paratek actually has traded higher in the past year than the analyst is predicting in this new report.

Canaccord Genuity has launched new analyst coverage on Paratek with a Buy rating and a $14 price target. That would represent upside of about 173% from the prior closing price of $5.13.

The driving force behind the call is that Paratek is deemed a core play in the infectious disease space. Its lead product, called Nuzyra, is about to launch into the acute pneumonia and skin infection markets. The firm also sees a potential expansion into the community setting and urinary tract infections coming over time. The report does address that some of Paratek’s peers have faced considerable challenges gaining acceptance in the infectious disease market, but the report indicates that two of the big three antibiotic indications, coupled with a commercial focus on patient populations not suitable for current standards of care, could lead to a successful launch for the company if the expectations are appropriately set.

As far as expectations being properly set, Canaccord Genuity’s Dewey Steadman believes that expectations for Nuzyra are currently overcooked on the sell-side. He believes that the company’s initial guidance should rationalize those launch expectations. Steadman noted:

With a launch expected in February, the Street currently models $30 million in 2019 total company revenue relative to our more prudent $12 million expectation. Based on our analysis of prior launches along with recent company comments, we think estimates will fall in line with our expectations after the company gives initial financial guidance in the coming weeks.

Nuzyra’s niche also should prevent it from being just another me-too product in infectious diseases. Steadman indicated that it could become a first-line target for specific patient populations. His report said:

We think Paratek has learned from recent launches and will position Nuzyra appropriately for potential first line use in specific patient populations. These populations include patients that can’t use specific antibiotics because of concerns over CDI, concomitant drug use like SSRIs and statins and other confounding conditions. While these patients represent under 20% of the ABSSSI and CABP populations, the sheer number of these cases in the US annually presents a meaningful market opportunity, especially for potential first line use.

There is also a note that Paratek could do deals of its own or become a target for a larger, top-tier infectious disease player. Steadman expects that the market should ideally scale down to just a handful of companies that can cover the big three antibiotic indications in skin infections, urinary tract infections and pneumonia.

While 24/7 Wall St. cautions against expecting gains of 100% to 200%, the good news is that Paratek shares traded as high as $19.35 in the past 52 weeks. That said, the bad news is that Paratek’s chart in 2018 looked more like a downward staircase, ending the year at $5.13. That means there has been far more pain than optimism building up into the start 2019.

Paratek shares were up just 2% at $5.25 on the heels of this huge upside report. Its shares have a 52-week range of $4.50 to $19.35, and its market cap is a mere $167 million.

For a reference on how other analysts have covered the stock: Merrill Lynch gave a new Neutral rating and $13 price target back in August when the share price was much higher. Its shares have slid since, and this is a company where many investors who have taken big losses probably want to see more actual developments occur rather than seeing an analyst call for new huge upside.

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