Mizuho: Pacira Pharma Has 'Forever' Potential, Stock Is A Buy

Pacira Pharmaceuticals Inc PCRX shares have lost 15 percent YTD. Mizuho’s Irina R. Koffler initiated coverage of the company with a Buy rating and a price target of $79, saying that while the Exparel market is vast and there are extremely favorable macro tailwinds, Pacira is “shielded from sector weakness.”

Positives About Pacira Pharma

Analyst Irina Koffler enumerated the positives for Pacira Pharma as:

1. The company is reemerging after “a successful "off-label marketing" battle” with the FDA, and an upward momentum is likely in the Exparel growth trajectory in the back half of the year. This could be boosted by an approval in nerve block by 2018.
2. Pacira Pharma’s key product, Exparel, is a non-opioid injectable analgesic used in the hospital market. This is poised to benefit from a number of tailwinds, including “bundled pricing for orthopedic surgeries and government advocacy against opioid utilization,” Koffler wrote.
3. Since management has held price flat this year, growth is not dependent on increases.
4. The "short hospital stay" surgical market is fairly large. The analyst mentioned that the estimate of 12.4M surgeries where Exparel can be used is conservative.
5. Exparel is difficult to manufacture and there are currently no generic competitors. This could be “quite durable in hospitals over the next several decades.”
6. The company is profitable, has sufficient financing and a well-respected management team.