Goldman Sees 26% Upside In Jazz Pharma Shares

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Goldman Sachs’ Stephan Stewart believes that Jazz Pharmaceuticals plc - Ordinary Shares JAZZ could have 26 percent upside.

Stewart initiated coverage of the company with a Buy rating and price target of $196.

Reasons to Own JAZZ

“In our view, Jazz is a picture of relative quality within this spec pharma group challenged with high leverage, limited organic growth and diminished return profiles,” the analyst mentioned.

Stewart recommended the stock for investors looking for strong quality and growth, given Jazz Pharma’s leading organic growth profile, with potential for extended Xyrem exclusivity.

The analyst expects the recent Defitelio launch in the U.S. to prove to be a catalyst in 2016, along with the Phase 3 data on JZP-110, expected in 4Q.

The analyst also pointed to the company’s clean balance sheet and management team, which has a robust track record.

Catalysts

Stewart expects Xyrem to grow 10 percent CAGR during 2016-2020, with possibility of exclusivity beyond the consensus forecast of 2020-2022.

The analyst mentioned that each additional year of exclusivity could add $10 to the stock valuation.

Following the robust Phase 2 data, Stewart expects JZP-110 to potentially reach peak sales of more than $300 million, while the FDA approval would add another $15 to the valuation.

Stewart also believes that the time is ripe for Jazz Pharma to look at strategic M&A and that “investors will reward a smart deal that helps diversify away from Xyrem.”

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Posted In: Analyst ColorLong IdeasInitiationAnalyst RatingsTrading IdeasGoldman SachsStephan Stewart
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