AMAG Pharma Has Catalysts Coming; Stock Could Rise $30

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  • Shares of AMAG Pharmaceuticals, Inc. AMAG have declined almost 23 percent in the last month.
  • Jefferies’ Eun K. Yang has maintained a Buy rating and price target of $80 on the company.
  • The recent pullback in the stock offers an attractive buying opportunity ahead of the catalysts Yang expects in the near term.

According to the Jefferies report, the recent selloff was due to “investors’ discouragement” due to the ANDA approval of McGuff’s hydroxyprogesterone caproate (Delalutin). Among the catalysts to the stock expected in the near term are expectations of robust sales in Q2, approval for Makena in 3Q15, as well as disclosure by the company of more details regarding Makena’s line-extension strategy.

The current stock valuation implies that investors expect no or very little success in the Makena line-extension following the expiry of orphan exclusivity in February 2018, Yang explained. In fact, the consensus and the estimates assume declining sales after this period.

"There is no/very little expectation for additional asset/product acquisition to augment its revenue/earnings opportunities,” the report stated, while adding that meetings with the management highlight that Makena sales are unlikely to be significantly affected by the approval of generic Delalutin.

Some of the investor frustration, according to Yang, might have been due to lack of details regarding the future of Makena. However, Yang expects the company to disclose its line extension strategy for Makena when it reports its 3Q15 earnings.

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Posted In: Analyst ColorReiterationAnalyst RatingsJefferies
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