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:

Pros:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

Cons:

  1. 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.
  2. Q4 print had inventory build and as inventory may have swung from low to high end.
  3. 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.
  4. 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)

 

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