Horizon Pharma PLC (NASDAQ:HZNP) has had a recent misstep on its hands with a Phase 3 flop in its Actimmune Friedrich’s Ataxia (FA) program that never met its primary and secondary endpoints.
Jefferies analyst David Steinberg finds the news “somewhat surprising- particularly as all endpoints were missed,” especially considering his “confidence in the FA program had grown in recent months based on discussions with several FA experts.” The analyst had anticipated a prospective sales peak exceeding $500 million, believing the FA indication had signified a considerable opportunity for the biotech firm.
Steinberg notes, “While we were of the view that positive data would have been transformative ($500M+ peak opportunity on a $1.0B+ current rev runrate, multiple expansion etc.), we had not included FA in our forecast due its high risk nature.”
However, the analyst still recognizes potential for the firm to generate long-term EPS acceleration up through the mid-teens moving ahead, and as such, remains bullish on the bigger picture at hand.
“In our view, the FA setback was a big one simply because it could have really transformed the profile of the company. Nonetheless, the growth outlook remains solid and we like the continued shift to higher margin, longer duration orphan assets. And the company continues to move forward aggressively in securing label expansion opportunities for its current assets – including the ongoing Actimmune oncology program. Moreover, mgnt indicated that there is no change in its appetite to pursue development stage assets that will help grow its rare disease business going forward,” Steinberg contends.
Therefore, even in face of the Phase 3 data that is admittedly “disappointing,” the analyst reiterates a Buy rating on HZNP with a price target of $26, which represents a 75% increase from where the stock is currently trading.
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, David Steinberg is ranked #4,045 out of 4,273 analysts. Steinberg has a 34% success rate and faces a loss of 6.6% in his yearly returns. When recommending HZNP, Steinberg forfeits 18.5% in average profits on the stock.
TipRanks analytics exhibit HZNP as a Strong Buy. Based on 10 analysts polled in the last 3 months, 8 rate a Buy on HZNP, while 2 maintain a Hold. With a return potential of nearly 87%, the stock’s consensus target price stands at $27.67.