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Why Leerink Adjusted Upside Expectations For 3 Biotechs

Why Leerink Adjusted Upside Expectations For 3 Biotechs
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It’s earnings season, and a steady stream of financial figures are separating the flawed from the flourishing in the pharmaceutical sector. 

The Ratings

Leerink reiterated Outperform ratings on the following stocks:

  • Zogenix, Inc. (NASDAQ: ZGNX), with a price target increase from $50 to $54;
  • Teleflex Incorporated (NYSE: TFX), with a price target decrease from $321 to $300; and
  • BioMarin Pharmaceutical Inc. (NASDAQ: BMRN), with a price target decrease from $142 to $132.

The Zogenix Thesis

Leerink already considered Zogenix a top 2018 stock, but the story just got better.

Recently issued and pending method patents may allow Zogenix to extend the exclusivity period of its ZX008 — an orphan treatment for Dravet syndrome — beyond the expected 7.5 years. Leerink expects additional clarity on the opportunity throughout 2018, with windfalls sustained for years.

“In our new model we've made small R&D and tax adjustments, but more importantly, now ZX008 reflects two years of protection beyond orphan,” analyst Paul Matteis said in a note. “Each additional year is worth $3 per share on DCF, though this could underestimate the theoretical strategic value of a multiyear revenue runway extension.”

The Teleflex Thesis

While traders rushed to sell Teleflex on a fourth-quarter top-line miss, Leerink remained a buyer.

The pharma firm's Neotract outperformance indicates segment momentum, and analysts see upside potential in RePlas sales, restructuring initiatives and potential merger opportunities.

“We give management the benefit of the doubt that the main culprits behind weak 4Q organic revenue should prove transient — i.e. distributor inventory workdown and disruption related to vascular solutions international distributor conversions,” said Leerink analyst Richard Newitter.

Newitter said he expects two-year top-line acceleration and mid-teens earnings-per-share growth.

The BioMarin Thesis

BioMarin outperformed Street and Leerink revenue estimates but fell short in EPS.

The firm guided for 15-percent year-over-year growth through 2020, and while Leerink considers the outlook important, the analysts are more concerned with gaining clarity on Brineura and pegvaliase.

Tax rate adjustments from 15 percent to 18 percent partly inspired the price target adjustment, said analyst Joseph Schwartz. 

Price Action

At the time of publication, Zogenix was trading marginally lower, Teleflex was down 1.3 percent and BioMarin was down 2.8 percent.

Related Links:

Pharma M&A Picks Up Momentum

FDA Watchlist: Catalysts To Look Out For This February

Latest Ratings for ZGNX

Nov 2018Leerink SwannInitiates Coverage OnOutperform
Sep 2018Bank of AmericaInitiates Coverage OnBuy
Sep 2018Northland SecuritiesInitiates Coverage OnOutperform

View More Analyst Ratings for ZGNX
View the Latest Analyst Ratings

Posted-In: Leerink Paul MatteisAnalyst Color Biotech Price Target Top Stories Analyst Ratings General Best of Benzinga


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