Drug maker Omeros Corporation (NASDAQ:OMER) delivered solid results for its earnings report for the first quarter of the year 2017. In reaction, Maxim analyst Jason Kolbert issues a Buy rating and increases the price target from $22 to $23, which represents an upside of roughly 43% compared to where the shares last traded yesterday.
For this first quarter of 2017, total revenues from Omidria dropped to $12.3 million compared to $12.9 million last quarter, yet total units sold grew by 14%. According to Kolbert, this gap is due to inventory costs the company incurred because of unsold products. The analyst points out the full effect of those high costs will be mostly reflected in next quarter’s earnings. Additionally, Omeros ended the quarter with $25M expenses for a net loss of $15M. On the other side of the balance, the drug maker has $33.63M in cash and $5.8M in restricted cash, along with $13M of accounts receivables. Moreover, Omeros was granted a $25M debt tranche from CRG LP, that can be entered any time before August 2017.
The company’s drug Omidria, intended to prevent ocular binding during and after eye surgery, saw its sales grow and is driving the company’s revenues, “but we see Omidria as a means to an end with the focus being on the pipeline opportunities,” elaborates the analyst.
“OMS721 continues to demonstrate positive data across multiple indications that are associated with complement. What differentiates OMS721 from other complement inhibitors like Alexion’s Soliris, is the ability to target just a single arm of the complement system (lectin pathway), which leaves the rest of the system intact for important functions like protecting against infections. As such, we see a lot of upside as OMS721 clinically advances,” optimistically concludes the analyst.
As usual, we suggest taking analysts’ recommendations with a grain of salt. According to TipRanks, a financial engine that measures and ranks analysts’ and bloggers’ performance, Jason Kolbert is ranked #4512 out of #4571 analysts. Kolbert has a 30% success rate and generates an annual yield of –15.9%. However, when recommending OMER, the analyst earns a 31.2% average profit on the stock.
TipRanks analytics show OMER as a Strong Buy. Based on 4 analysts offering recommendations for this share, 3 issue a Buy and 1 maintains a Hold. The 12-month average price target stands at $28.33, making an upside close to 93% from where the stock is currently trading.