Should You Buy Amarin (AMRN) Stock? 4 Pros, 4 Cons
Year-to-date, Amarin (AMRN) stock is up nearly 20% due to Pfizer buyout chatter. According to rumors, the pharma giant is interested in making a bid for the fish oil drug maker in a move to acquire its fish-oil medication Vascepa.
Going forward, can the stock keep up the good times? Or should investors be cautious? To decide, let’s take a look at 4 pros and 4 cons, courtesy of Jefferies analyst Michael Yee:
- Guidance could be raised this year – commentary suggests the Q4 beat was not related to inventory given mgmt said inventory remained in the normal range, hence $5-7M incremental growth going forward per quarter already gets to $350M in 2019 and they just did +$20M Q/Q (+50%) and the CVOT data just came out intra-quarter at AHA – and they just increased the salesforce from 150 to 400.
- Company being conservative about payor restrictions in 2019 as scripts have already started to accelerate and doc feedback suggests it didn’t get more restrictive.
- Scarcity value of $2-5B drug with significant 25% CVOT benefit and easily could utilize DTC ads so this fits into the hands of a global pharma company.
- Generics under litigation but will want to launch in 2029 when Vascepa is $3-5B not in 2021 when <$1B and market hasn’t developed.
- No near-term takeout as co has been side-lining any partnership and pharma interest to focus on filing the sNDA and will take time until March.
- Q4 print had inventory build and as inventory may have swung from low to high end.
- Q1 seasonally slower and loss of co-promote partner Kowa Pharma now who was helping them which ended YE:18 may cause disappointing Q1 after big Q4.
- High expectations now on 2019 after the Q4 print and consensus numbers will be much higher than $350M guidance.
All in all, Yee reiterates a Buy rating on AMRN stock with a price target of $30, which implies about 73% from current levels. (To watch Yee’s track record, click here)
Sell-side analysts have been nothing but bullish on AMRN over the past three months. Out of 5 analysts, all 5 are bullish on the stock. With a return potential of 82%, the stock’s consensus target price stands at $30.20. (See AMRN’s price targets and analyst ratings on TipRanks)