Morgan Stanley analysts gave their opinions on the outlook of healthcare companies Relypsa Inc (NASDAQ:RLYP) and Horizon Pharma PLC (NASDAQ:HZNP). Below, one analyst discuss concerns of Relypsa not hitting estimates, while the other remains positive on Horizon Pharma’s outlook in the short-term. Let’s take a closer look:

Relypsa Inc

Analyst Andrew Berens is concerned that Relypsa will be unable to reach his Q2 estimate for Veltassa sales, a drug that treats high potassium levels in a person’s bloodstream. On July 15th, Relypsa will release its script data for Veltassa for the month of June, representing half a year since the drug was launched.

Berens predicted $2 million in sales for the second quarter. He believes this estimate is at risk because this would require around 2,000 paid prescriptions in June, a 63% increase from the month earlier. Strong June numbers are essential if Veltassa is going to meet consensus expectations of a sharp increase in growth for the third quarter.

The analyst notes that in order for Veltassa to experience strong growth for the second half of the year it needs to improve its persistent rates. Berens states that a third of patients are dropping the therapy, hindering future growth, due to “tolerability and compliance issues, as well as existing episodic hyperkalemia treatment paradigms.”

Berens thinks that Relypsa will have a difficult time making Veltassa profitable given its high costs and “an expectation of lower persistency rates and compliance for potassium binders versus phosphate binders.”

According to the analyst, strategic optionality, an integral part of the long thesis for RLYP, is unlikely at this point. He reasons this is due to the “disappointing launch to date, the apparent elusive pathway to profitability, and the lack of visibility about longer-term market dynamics follow the ZS-9 delay.”

The analyst has maintained his Underweight rating with a price target of $9, marking a decline of 57% from current levels.

According to TipRanks, Berens has a yearly average return of 7.2% and a 60% success rate. The analyst has a 6% average loss when recommending Relypsa, and is ranked #695 out of 4038 analysts.

TipRanks shows that out of the 12 analysts who rated Relypsa in the last 3 months, 83% gave a Buy rating, 8.5% gave a Hold Rating and 8.5% gave a Sell Rating. The average 12-month price target for the stock is $30.45, marking a 50.37% increase from current levels.

Horizon Pharma PLC 

Analyst David Risinger is more optimistic regarding Horizon Pharma in the short-term due to several upcoming catalyst that could push up its stock price. Its stock price has declined 14% YTD, indicating to Risinger that now may be the best time to invest.

The analyst assumes that Horizon is attempting to contract with a major pharmacy, like CVS or Express, although there is currently no knowledge of said deal. If Horizon is able to secure a contract it would show “revenue durability for the primary care franchise,” which makes up 62% of Horizon’s 2016E revenues.

Risinger then discusses how Horizon’s commercialization efforts may help increase Krystexxa sales, a treatment for chronic refractory gout. These efforts are expressed by Horizon increasing Krystexxa’s salesforce from 15 to 45. The analyst now expects sales to grow throughout the year with 2016E sales accumulating to $80 million.

While Risinger expects Horizon’s Actimmune trail to fail, he doesn’t want to rule out the possibility of it being successful. If the analyst is wrong he expects the drug to represent up to $500 million in sales by 2020. This would represent a 40% increase in his current 2020 revenue estimates.

The analyst still views Horizon as a “high-risk stock” because 62% of his estimate sales for this year are generated from high-priced versions of generic drugs. Additionally, the company may “still face Primary Care drug payer access/pricing risk” and his expectations of the Actimume trail to fail.

Risinger upgraded Horizon to an Equal-Weight rating with price target of $24, marking a 26% increase from current levels.

According to TipRanks, the analyst has a yearly average loss of 0.1% and a 53% success rate. The analyst has a 1.8% average return when recommending Relypsa, and is ranked #2,167 out of 4038 analysts.

TipRanks shows that out of the 8 analysts who rated Horizon in the last 3 months, 75% gave a Buy rating and 25% gave a Hold Rating. The average 12-month price target for the stock is $31.28, marking a 64.12% increase from current levels.