Amarin (AMRN) has had a lot of attention over its fish oil pill Vascepa, which aims to help those with cardiovascular problems and already has one FDA approval. The company presented top-line results of the REDUCE-IT trial, which shook the medical world. While most doctors in the crowd said they planned to prescribe the drug, some researchers asserted that the drug’s benefits were exaggerated and that the placebo used was not an effective one. When the dust settled from that drama, the European Medicines Agency declared Omega-3 fatty acids to be an ineffective element for improving cardiac health. Omega-3 is largely found in fish oil, which is the main ingredient for Vascepa.
Seeking Alpha blogger The Value Investor likes the risk/reward associated with this oil drug maker and explains his bullish case: “The market is dearly disappointed by the lack of a greater increase in the 2019 sales guidance, with consensus estimates calling for sales far above the $400 million mark. Nonetheless, I believe management might be conservative here as the timing of the ramp-up in sales is hard to do, depending on potential approval from the NDA filing and market forces. Hence, I am not attaching too much weight to the “miss” in the guidance, as the company is essentially breaking-even already and cash balances are solid following the recent equity issuance.”
“Reality is that sales multiples are not very cheap at around 10 times, yet the potential is still there to create a multi-bagger. At this level, I would like to explore investment options through long-term higher strike calls. With those options being too pricey in my opinion, I have to resort to the shares as the combination of a potential blockbuster and a justifiable absolute valuation, makes that I am actively looking to pick up a few shares at these and slightly lower levels,” the blogger added.
Overall, The Value Investor says he plans to buy some of the stock on any additional dips toward the $10.00 mark. The stock currently trades around $13.00. (To watch The Value Investor’s track record, click here)
Amarin stock has a resounding “yes” on Wall Street. TipRanks analytics show that out of 5 analysts, all five are bullish. The price target of $31.80 shows a potential upside of about 134%. (See AMRN’s price targets and analyst ratings on TipRanks)