J.P. Morgan Pours Cold Water on Puma Biotechnology (PBYI) Stock

Investors weren’t impressed with Puma Biotechnology (PBYI) latest earnings report, and at least one Wall Street analyst has had enough. J.P. Morgan analyst Cory Kasimov downgraded the stock on Friday, knocking his rating from Overweight to Underweight, while slashing the price target to $83 (from $23), which implies a potential upside of 15% from current levels. (To watch Kasimov’s track record, click here)

PBYI reported 3Q18 results with net revenues of Nerlynx of $52.6 million, coming in below consensus’ estimate of $57 million. Though the company reported growth, the pace of growth has decelerated. Furthermore, in this quarter, Nerlynx discontinuations due to adverse events were 18% vs. prior quarter at 13%, giving investors another reason to be concerned.

As for the question of just how big the company’s cancer drug Nerlynx might be, Kasimov is now setting his sights lower: “Our preview of 3Q suggested this quarter was shaping up as a make-or-break event for PBYI, and Nerlynx fell short. Not only did sales fall a little shy of consensus, but there were some discouraging trends highlighted on the call: the discontinuation rate increased (now at ~36%; 18% due to AEs) and monthly new patient starts were adjusted lower. While reiterated 2018 sales guidance of $175M-$200M still appears achievable, these issues prompt concerns about the long-term potential of the drug. There simply doesn’t appear to be enough new patient starts to offset the discontinuations and patients rolling off therapy after 12 months. Accordingly, we are significantly moderating our outer year Nerlynx forecasts and downgrading to Underweight, as we expect shares to underperform our broader coverage universe until evidence of sustained commercial momentum is apparent.”

Net-net, the battle seems to be torn between the bulls and sideliners vs. bears as TipRanks analytics demonstrate the drug maker as a Hold. Based on 8 analysts polled in the last 3 months, 2 rate a Buy on Puma Biotechnology stock, 2 issue a Hold, while 4 recommend a Sell. However, with a return potential of nearly 129%, the stock’s consensus target price stands at $46. (See PBYI’s price targets and analyst ratings on TipRanks)


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