From the analyst’s perspective, his caution is centered not so much on the double-hitter news from yesterday between a new agreement with Palatin Technologies, Inc. (NYSEMKT:PTN) and preliminary fourth-quarter results and guidance that missed expectations. Rather, the analyst is apprehensive that the biotech firm’s Makena autoinjector, which he deems the “key to the performance of AMAG stock in 2017,” might buckle under price competition.
Tanner notes, “When we initiated coverage of AMAG stock, key to our investment thesis was our belief that successful development and approval of the Makena autoinjector was necessary, but not sufficient, for AMAG to successfully defend the Makena franchise. We thought the company might be able to differentiate the auto-injector product from IM-delivered formulations by demonstrating reduced pain associated with use of the former. If so, convincing payers that a premium price was warranted might have been possible.
However, “Given the preliminary data demonstrating increased pain associated with subq adiministration vs. IM delivery, we believe payers are likely to favor the IM-delivered product given that it will likely be priced lower than the Makena auto-injector, in our opinion. If that dynamic materializes, we believe a precipitous decline in Makena market share could ensue,” Tanner contends.
Therefore, the analyst reiterates a Neutral rating on shares of AMAG with a $33 price target, which represents a 43% increase from where the stock is currently trading.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, three-star analyst William Tanner is ranked #1,363 out of 4,350 analysts. Tanner has a 55% success rate and gains 4.5% in his annual returns. When recommending AMAG, Tanner earns 0.0% in average profits on the stock.
TipRanks analytics exhibit AMAG as a Buy. Based on 6 analysts polled by TipRanks in the last 3 months, 4 are bullish on AMAG Pharmaceuticals stock, while 2 remain sidelined. With a return potential of nearly 63%, the stock’s consensus target price stands at $37.40.