The Australian share market has traditionally delivered a return in the region of 10% per annum.
While that is a fantastic return, it pales in comparison to the potential return on offer with the ASX 200 stock in this article.
That's because Bell Potter believes this stock is dirt cheap and could be destined to rocket from current levels.
Image source: Getty Images
Which ASX 200 stock?
The stock that Bell Potter is bullish on is Neuren Pharmaceuticals Ltd (ASX: NEU).
It is a biotechnology company with two novel drug assets. The most advanced is Daybue (trofinetide), which has been licensed to Acadia (NASDAQ: ACAD) for commercialisation.
Neuren's second asset, NNZ-2591, is under development for multiple rare diseases, the most advanced of which is Phelan McDermid syndrome.
The ASX 200 stock is currently conducting a Phase 3 trial in Phelan McDermid syndrome and has conducted Phase 2 trials in three other rare neurological conditions.
What is the broker saying?
Bell Potter was pleased with the ASX 200 stock's performance in FY 2025, highlighting that it is profitable from its existing royalty stream alone. It said:
The FY25 result demonstrated NEU remains comfortably profitable based on the existing royalty stream from Daybue more than offsetting R&D spend on the company's second asset, NNZ-2591. Royalty revenue of $64.6m (+15%) plus interest income of $12.2m was well above opex of $42.6m, resulting in NPAT of $30.4m. Cash balance is a mighty $296m as at 31-Dec-2025 with no debt. This is after the $50m buyback over the last ~15 months, which NEU announced will resume from 2nd of March.
Should you invest?
According to the note, the broker has reaffirmed its buy rating and $22.00 price target on the company's shares.
Based on its current share price of $12.21, this implies potential upside of 80% for investors over the next 12 months.
Commenting on its recommendation, the broker said:
We have increased our Daybue licensing income forecast but are still below Acadia's guidance range. While the recent EU approval setback clouded NEU's near-term catalyst, the company's balance sheet remains impeccable and will continue to be supplemented by ongoing royalties and possible milestones.
The biggest upside opportunity still lies in the company's second asset, NNZ-2591, for which the Phase 3 trial in Phelan McDermid syndrome is now recruiting. Results from the Phase 3 trial are still ~18 months away but represent the key inflection opportunity for NEU. We maintain our BUY recommendation and make no change to our $22.00 PT.
