Analysts Cut Price Targets As Heron Therapeutics' Zynrelef Disappoints In Q3

  • Heron Therapeutics Inc HRTX reported a Q3 EPS loss of $(0.38), in line with consensus, with sales of $26.60 million missing the consensus of $26.96 million.
  • Needham notes it was another ugly quarter for Zynrelef with 3Q22 sales of $2.7 million (+8% Q/Q and +29% Y/Y) significantly short of the guided 40-50%Q/Q growth rate partly due to depressed surgery volumes (down ~11% Q/Q). 
  • Needham analyst maintains its Buy rating, with a lower price target of $8 from $10, as investors will likely relegate Zynrelef to a "show me" story until it can consistently generate meaningful sales growth.
  • Zynrelef has significantly underperformed launch expectations with lower-than-expected unit demand and is also seeing pricing pressures. 
  • Related: FDA Approves Heron Therapeutics' Post-Op Nausea Treatment.
  • Cantor Fitzgerald has lowered the price target on Heron from $12 to $10 with an Overweight rating.
  • The analyst notes the company guidance of 30-40% Zynrelef sales growth in 4Q22, over 3Q22, which would be viewed positively if the company can achieve that. 
  • The analyst continues to believe in the potential of Zynrelef, and indicators do look promising; however, investors will need to see this translate to revenue pull-through in 2023, especially post the potential label expansion for Zynrelef. 
  • Price Action: HRTX shares are down 8.41% at $3.16 on the last check Wednesday.
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