Brean Capital Maintains Sell On Auxilium Pharma Following Restructuring Plan

In a research report issued yesterday, Brean Capital analyst Jonathan Aschoff maintained a Sell rating on Auxilium Pharmaceuticals (NASDAQ:AUXL) with a $14 price target, following the company’s announcement of its restructuring plan to cut costs.

Aschoff wrote, “Operating expenses, including SG&A, R&D, and COGS, are expected to be down by at least $75 million in 2015, and total headcount will be reduced by about 30%. On the SG&A side, the company will consolidate its three sales forces, which were put in place in 2Q13 after the acquisition of Actient, into two sales forces, with one targeting orthopedics for Xiaflex for Dupuytren’s contracture and the other targeting urologists for the remaining products and indications. We believe the sales force consolidation was primarily due to the shrinking branded Testim business, declining testosterone replacement therapy market overall, as well as smaller-than-expected markets for Dupuytren’s contracture and Peyronie’s disease. On the R&D front, Auxilium will focus its efforts on the development of Xiaflex for cellulite and frozen shoulder syndrome. The regulatory path for cellulite is unclear to us, and we see a small market opportunity for frozen shoulder syndrome, akin to what we have seen and believed for Xiaflex all along. On the COGS front, Auxilium will improve manufacturing efficiency and enhance inventory management. While the cost restructuring may enhance Auxilium’s bottom line and balance sheet, we do not see plans to improve its top line. We therefore cut our revenue forecasts for Auxilium and maintain our target price and sell rating.”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Jonathan Aschoff has a total average return of 19.1% and a 61.9% success rate. Aschoff has a 3.1% average return when recommending AUXL, and is ranked #143 out of 3277 analysts.

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