Stifel Reiterates Horizon Pharma As 'Select List' Pick, Sees 'Buying Opportunity In Multiple Misguided Reactions'

• Shares of Horizon Pharma PLC HZNP have come under "inordinate pressure" in the last few days, according to Annabel Samimy of Stifel.
• Samimy maintained a Buy rating and $45 price target on the stock.
• According to Samimy, Horizon is "one of the stronger diversified growth stories" in the specialty pharmaceutical space.

Shares of Horizon Pharma lost nearly 12 percent on Tuesday, adding to Monday's steep losses as investors and traders heavily sold the name due to concerns around prescription trends, the result of deliberate PME "optimization," and further rhetoric related to drug pricing within the general biopharma space.

Annabel Samimy of Stifel defended Horizon in a note while reiterating a Buy rating and unchanged $45 price target on the stock as the investment community's negative reaction is "largely overdone."

Related Link: Should Biotech Investors Take Hillary Clinton's Drug Pricing Plan Seriously?

Samimy pointed out that Horizon's Rx trends have slowed down in the third quarter due to slower summer months but primarily because of deliberate PME "optimization." The analyst continued that following near full penetration of the PME program in the second quarter, the company entered the next phase of PME, which consists of driving growth of paid Rx and "better controlling" the level of "brought-down" Rx – generating a visible impact on IMS trends.

On Track To Beat Q3 Revenue

Meanwhile, Horizon has conducted several re-negotiations of wholesaler contracts given its now "stronger" and "more diversified" position which resulted in more favorable terms for the company. Samimy suggested that the net result of the PME optimization and wholesale negotiations should be a compression of Gross-Net discounts by 5 to 10 percent. Nevertheless, the analyst still suggested that the company is on track to "largely" beat its third quarter consensus revenue estimate of $191 million and is "likely" to also beat its full year revenue guidance of $680 million.

Clinton

Finally, Samimy commented on drug pricing, specifically noting remarks from Hillary Clinton who may be looking to campaign on a promise to regulate drug pricing. The analyst suggested that Clinton's vision may be "admirable," but actually accomplishing any change would require bipartisan support which may imply "little chance" of gaining traction in the near-term.