With the market effectively at all-time highs after the election, investors are looking for new ideas to generate income or gains ahead. Sometimes investors turn to Wall Street research to look for hidden gems and companies that they may have never heard of. Some of these analyst calls are looking for far more upside than the traditional 8% to 15% implied potential in most Dow Jones Industrial Average or S&P 500 Index stocks that are rated as Buy. However, if investors are looking for more upside they might also be taking more risk.

NovoCure Ltd. (NASDAQ: NVCR) is one such stock which has been volatile and we have seen a call for substantial upside. NovoCure shares rose over 6% on Friday to $9.95. NovoCure offers a potential double look for investors as it trades under $10 and is a small cap stock, with a market cap of $863 million.

NovoCure’s driving force was strong data regarding a Phase III drug trial in newly diagnosed Glioblastoma, which confirmed its successful interim analysis and demonstrated superior two-year and four-year survival rates.

Along with other data, NovoCure showed that the percentage of patients alive at two years in the Optune together with temozolomide arm was 43%, versus 30% in the temozolomide alone arm. This is a 43% increase in the chance of living two years. The percentage of patients alive at four years in the Optune together with temozolomide arm was 17%, versus 10% in the temozolomide alone arm — a 70% increase in the chance of living four years.

NocoCure’s press release said:

The long-term analysis demonstrated superior two-, three- and four-year survival of patients treated with Optune together with temozolomide compared to temozolomide alone. The interim analysis results – published in the Journal of the American Medical Association (JAMA) in December 2015 – showed significant extension of both progression free and overall survival in newly diagnosed GBM patients receiving Optune with temozolomide compared to temozolomide alone.

So, does all of this mean NovoCure shares can double? Tao Levy of Wedbush Securities seems to think so. The brokerage firm’s research department reiterated an Outperform rating and $20 price target on November 18.  Wedbush’s research report does say that the firm continues to be skeptical on the risk/benefit of immunotherapy in GBM, but they show that the recent data releases should help spread awareness and address lingering doubts among oncologists.

Wedbush’s $20 price target is based upon a 7-times multiple on forward 12-month pro-forma sales  estimate and $2 of net cash per share. The firm shows that this multiple is in line with several high-growth and small-to-mid-cap medical tech companies, which range from 5 to 10 times.

Wedbush’s research report said:

NovoCure will report interim data from the ongoing pilot Phase 2 STELLAR trial of TTFields in unresectable, previously untreated mesothelioma at the International Association for the Study of Lung Cancer (IASLC) in Vienna on Dec 7. Data reported yesterday from STELLAR showed that the first 42 patients treated in the single-arm study had a one-year survival rate of 79.7% and median PFS of 7.3 months, with median OS not yet reached (at 11.5 months of follow-up). Patients in the study are being administered TTFields at 150 kHz plus SOC chemotherapy (pemetrexed plus cisplatin or carboplatin), with full enrollment of 80 patients expected to complete next year. The results from STELLAR compare favorably with historical control of one-year survival of 50.3% and median PFS of 5.7 months observed with cisplatin plus pemetrexed (n=226, ITT pop) in a Phase 3 in unresectable malignant pleural mesothelioma; of note, patients administered this treatment had a median survival of 12.1 months (Vogelzang et al), a bar that TTFields should easily surpass in STELLAR. We expect greater discussion around the SNO and IASLC data presentations, as well as updated data from the Phase 2 studies in pancreatic cancer and ovarian cancer, at the company’s R&D Day in New York City on December 12.

Wedbush did identify risks to the attainment of that aggressive $20 price target, including slower-than-expected adoption of Optune and a delay or failure in obtaining reimbursement.

When investors see a research report calling for a stock to potentially double, there better be some serious consideration of the risks. They should look beyond what a single research report is telling them.

On the upside here, Wedbush is not even the highest analyst rating on NovoCure. Thomson Reuters shows one analyst calling for it to hit $34. The lowest analyst price target is $15, which would still imply more than 50% upside if they are proven right.

Another consideration for investors is that NovoCure has only been public since 2015. It has offices in the U.S. and Europe but is based in the Channel Islands, so it is not a U.S.-domiciled company.

Again, there is no free lunch when it comes to investing — particularly in biotech or biohealth stocks. Sometimes drugs and devices just do not live up to plan. Sometimes they have better results in small groups but fail in larger population trials. And sometimes they just flop.

After closing up 6.4% at $9.95 on Friday, NovoCure shares have a 52-week trading range of $5.95 to $28.95. Its consensus analyst price target from Thomson Reuters is slightly higher than the Wedbush target at $23.25.

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