Valeritas Stock Should More Than Double, Oppenheimer Says

Valeritas Holdings Inc VLRX, a medical technology company known for its V-Go Wearable Insulin Delivery device, could more than double in value, according to Oppenheimer.

The Analyst

Oppenheimer's Steven Lichtman initiated coverage of Valeritas with an Outperform rating and 12- to 18-month price target of $3.50.

The Thesis

Valeritas' V-Go device targets a large market of 5.6 million Type 2 patients who are prescribed insulin therapy, Lichtman said in a note. The company's technology is able to provide continuous basal insulin and on-demand mealtime bolus insulin over a 24-hour period. As such, it could be seen as an attractive alternative to standard insulin therapy for Type 2 patients.

The company also has three catalysts ahead to support growth, including:

• A ramp of new sales model, including a high-touch/high service model with a focus on high-volume MDI prescribes;
• International expansion opportunities from recently signed distribution agreements with more deals in the pipeline; and
• Product improvements to its technology, such as a new Bluetooth-enabled extension system.

Valeritas has also put in place a new and more-focused salesforce, which should translate to a growth rate of more than 30 percent over the next few years, the analyst wrote. Given a compelling outlook, the stock's multiple of less than one EV/sales represents an attractive entry point for investors.

The $3.50 price target is based on an approximate multiple of two on 2019E EV/sales, which is a discount to its peers but justified due to a lower EBIT margin and management's commentary of additional cash needs.

Price Action

Shares of Valeritas Holdings were trading higher by more than 7.7 percent at $1.46 Thursday afternoon.

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