Pacira Shares Look Expensive, Stifel Says In Bearish Initiation
Despite the recent upward momentum in Pacira Pharmaceuticals Inc (NASDAQ: PCRX) shares, Stifel is taking a bearish stance on the stock.
The Analyst
Analyst Derek Archila initiated coverage of Pacira with a Sell rating and $41 price target.
The Thesis
The recent rally in Pacira shares was supported by upward revisions to 2018 sales guidance for Exparel, its non-opioid, post-operative pain medication; positive reports regarding CMS unbundling of non-opioid products; and the potential for an Exparel J-code in 2019, Archila said in the initiation note.
Exparel sales have improved, primarily due to the company's partnership with Johnson & Johnson (NYSE: JNJ), the analyst said.
The rally could run through the latter part of 2018 and possibly into early 2019 based on sentiment alone, he said.
Yet Archila sees medium- to long-term headwinds from the potential approval of a rival drug from Heron Therapeutics Inc (NASDAQ: HRTX).
Pacira could find it tough to expand margins once Heron's HTX-011 is on the market, potentially resulting in $3-$8 downside to Stifel's price target, the analyst said.
Additional risk could stem from the company's inability to execute on its gross margin initiatives as well as the potential consequences of a generic filing on Exparel, especially as Pacira is a one-product company, Archila said.
"With that said, we believe Pacira's Exparel is ill-positioned relative to the competition long-term, and given its concentration risk, think shares look expensive at current levels."
The Price Action
Pacira shares have gained about 4 percent year-to-date. The stock was trading down 1.48 percent at $46.65 before the close Friday.
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Latest Ratings for PCRX
Date | Firm | Action | From | To |
---|---|---|---|---|
Feb 2019 | Mizuho | Downgrades | Neutral | Underperform |
Nov 2018 | JP Morgan | Maintains | Neutral | Neutral |
Nov 2018 | BMO Capital | Maintains | Market Perform | Market Perform |
View More Analyst Ratings for PCRX
View the Latest Analyst Ratings
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