Considerable strength remains visible among biotechnology stocks, as reflected by the 3 percent gain being posted by the iShares NASDAQ Biotechnology Index today. The index is rebounding after ending yesterday at its lowest closing level in well over a month. Among the equities in focus today are controversial drug giant Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and specialty pharmaceutical company Pacira Pharmaceuticals Inc (NASDAQ:PCRX).
Valeant Pharmaceuticals Intl Inc
Valeant Pharmaceuticals shares jumped nearly 18% to $111.40 following a new distribution deal, in which Valeant will distribute its dermatological and ophthalmological products through Walgreens stores at a 10% discount.
Subsequently, BMO Capital analyst Alex Arfaei reiterated a Hold rating on shares of Valeant Pharma, with a price target of $133, which implies an upside of 21% from current levels.
Arfaei commented, “We believe this deal increases visibility and is a solid step toward building back investor confidence by going with a more visible and credible fulfillment channel.” The analyst continued, “The impacts of these new agreements are difficult to quantify for now because they are based on 2015 volumes, which include significant specialty pharmacy sales that will not reoccur in 2016. While the press release quotes $600 million in savings to the healthcare system, this will be made up from a combination of lower distribution fees, and lower prices (i.e., doesn’t equal to lower VRX revenues or operating income). Overall, we believe the increase in volume from Walgreens should help offset some of the lost volumes we are forecasting from Philidor and other specialty pharmacies. We’ll look for more info during the investor day on December 16.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Alex Arfaei has a yearly average return of 5% and a 66% success rate. Arfaei has a -13.6% average return when recommending VRX, and is ranked #683 out of 3616 analysts.
Out of the 22 analysts polled by TipRanks, 15 rate Valeant Pharmaceuticals International stock a Buy, 6 rate the stock a Hold and 1 recommends Sell. With a return potential of 46.6%, the stock’s consensus target price stands at $160.88.
Pacira Pharmaceuticals Inc
Pacira Pharmaceuticals shares are rising 15.50% to $72.10 after the company announced a highly favorable resolution to its lawsuit against the FDA. Effectively, the resolution lifts the restriction on the company’s post-surgery pain drug Exparel.
In reaction, Brean Capital analyst Jonathan Aschoff reiterated a Buy rating on the stock, with a price target of $92, which implies an upside of 28% from current levels.
Aschoff commented, “Following the resolution with the FDA, not only did Pacira regain the right to market Exparel for all surgeries except pediatric use, but it has Exparel’s efficacy claim reset to the originally granted 72 hours, which was approved in 2011, but cut to 24 hours by the FDA 14 months ago. Pacira and the FDA also agreed to facilitate an open and straightforward communication channel regarding future interactions.”
The analyst concluded, “We expect the settlement to favorably affect Pacira’s development programs, namely in oral surgery, in addition to materially increasing the salesforce’s freedom to broadly promote. Pacira reaffirmed its plan to introduce a smaller vial size, 10 ml Exparel for smaller surgical procedures such as oral surgery. Pacira will likely disclose data from its ongoing oral surgery trial by mid-2016 and launch the 10 ml Exparel in 4Q16.”
According to TipRanks.com, analyst Jonathan Aschoff has a yearly average return of -5.4% and a 39.7% success rate. Aschoff has a -15.6% average return when recommending PCRX, and is ranked #3465 out of 3616 analysts.
Out of the 6 analysts polled by TipRanks in the last 3 months, 5 rate Pacira stock a Buy, while one is neutral on the stock. With a return potential of nearly 18%, the stock’s consensus target price stands at $85