Market Overview

Valeritas Stock Should More Than Double, Oppenheimer Says

Valeritas Stock Should More Than Double, Oppenheimer Says

Valeritas Holdings Inc (NASDAQ: 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.

Related Links:

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Baird Sees 'Improved Odds' Tandem Diabetes Care Will Survive

Latest Ratings for VLRX

Dec 2018Initiates Coverage OnBuy
Jul 2018Initiates Coverage OnOutperform
Mar 2018DowngradesOutperformMarket Perform

View More Analyst Ratings for VLRX
View the Latest Analyst Ratings

Posted-In: Diabetes insulin Oppenheimer Steven Licthman V GoAnalyst Color Analyst Ratings Best of Benzinga


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