Despite the recent upward momentum in Pacira Pharmaceuticals Inc PCRX shares, Stifel is taking a bearish stance on the stock.
The Analyst
Analyst Derek Archila initiated coverage of Pacira with a Sell rating and $41 price target.
The Thesis
The recent rally in Pacira shares was supported by upward revisions to 2018 sales guidance for Exparel, its non-opioid, post-operative pain medication; positive reports regarding CMS unbundling of non-opioid products; and the potential for an Exparel J-code in 2019, Archila said in the initiation note.
Exparel sales have improved, primarily due to the company's partnership with Johnson & Johnson JNJ, the analyst said.
The rally could run through the latter part of 2018 and possibly into early 2019 based on sentiment alone, he said.
Yet Archila sees medium- to long-term headwinds from the potential approval of a rival drug from Heron Therapeutics Inc HRTX.
Pacira could find it tough to expand margins once Heron's HTX-011 is on the market, potentially resulting in $3-$8 downside to Stifel's price target, the analyst said.
Additional risk could stem from the company's inability to execute on its gross margin initiatives as well as the potential consequences of a generic filing on Exparel, especially as Pacira is a one-product company, Archila said.
"With that said, we believe Pacira's Exparel is ill-positioned relative to the competition long-term, and given its concentration risk, think shares look expensive at current levels."
The Price Action
Pacira shares have gained about 4 percent year-to-date. The stock was trading down 1.48 percent at $46.65 before the close Friday.
Related Links:
Attention Biotech Investors: Mark Your Calendar For These September PDUFA Dates
Zogenix Has $3.4B Opportunity With Pediatric Epilepsy Asset, BofA Says In Bullish Initiation
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.