Compass Pathways (CMPS) shares printed a new year-to-date high on April 20 after President Donald Trump signed a landmark executive order to accelerate the approval and research of “psychedelic” medicines.
The sharp surge on Monday drove CMPS’ relative strength index (RSI) into the early 80s, signaling extremely overbought conditions that often precede a meaningful pullback.
Following today’s rally, Compass Pathways stock is up more than 90% versus its year-to-date low.
Why Trump’s Executive Order Is Bullish for CMPS Shares
Trump’s “Accelerating Medical Treatments for Serious Mental Illness” executive order is a game-changer for CMPS shares and the psychedelics sector at large.
By instructing the FDA to issue “national priority vouchers” to firms with breakthrough therapy designations, the administration is effectively shortening the regulatory marathon for London-based Compass Pathways.
These vouchers can shave months off the FDA review process or be sold to other pharmaceutical companies for hundreds of millions of dollars, providing a potential non-dilutive cash infusion.
Additionally, the $50 million in ARPA-H federal matching funds for state research subsidizes the clinical infrastructure Compass relies on for its Phase 3 trials in treatment-resistant depression.
Is It Worth Chasing the Momentum in Compass Pathways Stock?
While Compass Pathways shares are already trading at record levels, the company’s first-mover status in a multi-billion-dollar psychedelics market keeps it attractive for long-term investors.
The federal pivot from Schedule I restriction toward “Right to Try” access drastically lowers the terminal regulatory risk for COMP360.
Plus, the Nasdaq-listed firm has recently exercised a $200 million warrant program, which means a strengthened balance sheet and a low risk of immediate dilution for those investing today.
Note that the biotech firm currently sits decisively above its major moving averages (MAs) as well, reinforcing that bulls are firmly in control across multiple timeframes.
Compass Pathways Remains Buy-Rated Among Wall Street Firms
Wall Street remains uber bullish on CMPS stock as its primary headwind, DEA scheduling, is being neutralized by Trump’s executive order, creating a clear path to commercialization.
The consensus rating on Compass Pathways is set at a “Strong Buy” currently, with the mean target of nearly $22 indicating potential upside of another 145% from here.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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