Citigroup Downgrades Raptor Pharma; Concerned With Declining Investor Sentiment Around Revenue

Raptor Pharmaceutical Corp. RPTP reported its 2Q16 revenue ahead of expectations. Citi’s Joel Beatty downgraded the rating on the company from Buy to Neutral, citing elevated investor expectations around revenue. The price target has been raised from $6 to $8.

Results And Guidance

Raptor Pharma reported its 2Q16 revenue at $32.0 million, representing 16 percent sequential growth and beating the Citi estimate of $29.0 million and consensus expectation of $28.5 million. The beat was mostly driven by Procysbi, although cystic fibrosis antibiotic Quinsair had been launched in Europe during the second quarter, analyst Joel Beatty noted.

Management indicated that since the launch of Quinsair in Europe on April 11, its sales had been tracking ahead of Cayston’s sales, which was ~$5.5 million in the first 12 months of its launch in Europe. The company raised its 2016 revenue guidance from $115-$125 million to $125-$135 million.

Reasons For Downgrade

Beatty commented that investor expectations around revenue “have grown quite a bit recently,” while adding that “we lack conviction on Quinsair receiving FDA approval without data from an additional trial.” Moreover, Raptor Pharma’s shares had gained 74 percent since the rating was upgraded to Buy on Jan 26, 2016, versus a 5 percent for IBB.

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