It is no easy task to find a stock that may double in price. Most analyst upgrades and initiations on Dow or S&P 500 stocks come with upside projections of 8% to 15%. Upside of more than 25% implies that an analyst is extremely aggressive, and it is often in speculative stocks. So what happens when you hear an analyst call predicting that a stock could nearly double in value?

The freshest case is that of Cara Therapeutics Inc. (NASDAQ: CARA). A Janney Capital Markets research report on Cara Therapeutics noted a fair value estimate of $28.00. This is technically upside of 82% to its target, but what stands out here is that the consensus analyst target price is $29.00 and the highest analyst price target is $34.00. In fact, Thomson Reuters shows that $25.00 is the lowest analyst price target — almost $10.00 higher than the current share price.

Janney’s call is close enough to a potential double, but other analysts already have speculated that Cara could more than double. Janney’s Ken Trbovich, the analyst behind the report, has said that enrollment is complete in its Phase 2 study of oral CR845.

ALSO READ: 4 S&P 500 Stocks That Could Be Up 50% by Year End

Where Janney’s call could easily imply that shares could double is in the assumptions if it makes it to market. Trbovich expects that CR845 could hit $200 million to $300 million in annual sales within five years of its launch. The firm’s discounted cash flow model actually came up with a $32.00 per share valuation for Cara. Trbovich said in his call:

We believe enrollment in Cara’s first proof-of-concept study of oral CR845 is now complete. This places Cara on track to confirm safety and establish potential efficacy for an oral formulation of CR845 in a target patient population for the first time in the fourth quarter of 2015. Demonstrating effectiveness of an oral form of CR845 to treat pain would significantly expand the commercial potential for CR845 in pain indications. With further study, it can also open the door to partnering opportunities for Cara to out-licensing oral CR-845.

More observations here also stood out. This Phase 2a trial was shown to be the first trial designed to measure the safety and potential effectiveness of oral CR845 in patients experiencing pain — in this case pain from osteoarthritis of hip and knee. The study involves twice daily dosing of four different doses with a twenty-fold difference in dose between the highest and lowest doses being tested. Janney’s report further said:

Cara initiated its first study of oral CR845 in patients experiencing pain in mid August. Although the study involves just two-weeks of dosing with CR845 the time from initial screening to final follow-up could last up to 38 days. As of October 23, the study centers are no longer actively recruiting patients, leading us to believe enrollment in the study is complete, the study is on track for completion and reporting of top-line results in December 2015.

ALSO READ: Could Chipotle Shares Drop Another $200?

Janney Capital Markets resumed coverage of Cara Therapeutics with a Buy rating. Its $28.00 price target is actually lower than the bulk of the analysts covering Cara. The call of course comes with risks. It is in anticipation of the initial Phase 3 results for IV-CR845 in pain, as well as receipt of breakthrough therapy designation for IV-CR845 in uremic pruritus in the first half of 2016.

Janney’s description notes of Cara include many caveats, but the key here is the note about this being a “kappa agonist.” The report noted:

For thirty years researchers and companies have studied kappa-agonist as the potential “Holy Grail” for pain—morphine-like pain relief without risk of respiratory depression and liability for abuse. Past efforts with other kappa agonists have failed because kappa agonists normally cause severe CNS adverse events. CR845 avoids this by not crossing the blood-brain barrier. Cara has treated more than 440 patients with CR845 and none of them have experienced kappa-related CNS problems. In addition to pain indications, Cara is developing CR845 for uremic pruritus (chronic itch experienced by many end-stage renal disease patients), the only indication for which a kappa agonist has ever been approved. We believe development of CR845 in uremic pruritus offers an easier path to market, likely carries less clinical and regulatory risk, and can be addressed with less commercial effort than CARA’s efforts to develop CR845 to treat pain.

Cara closed at $15.32 on Tuesday and was at $15.49 in mid-Wednesday trading. Its consensus analyst price target of $29.00 is against a 52-week range of $7.83 to $23.61. Cara came public in a Nasdaq IPO at $11.00 per share for 5 million shares at the start of 2014. The current market cap is $422 million.

ALSO READ: 3 Tech Stocks to Buy for a Possible Year-End Rally

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.