Next Year Setting Up To Be Smooth For Jazz Pharmaceuticals

UBS expects 2017 to be better for Jazz Pharmaceuticals plc JAZZ since the year-over-year comparisons would be easier for Xyrem and Erwinase. The brokerage believes the risk reward at current levels are favorable since the stock suffered an aggressive selloff in the last month period due to tepid forecast for Xyrem volume.

The company's EPS failed to meet the Street's estimates in three out of the last four quarters. For the September quarter, analysts' EPS estimates have come down from $2.98 90 days back to $2.62 seven days back and $2.61 currently.

Analysts Marc Goodman and Ami Fadia think "Management commentary supports our positive view Jazz remains one of our favorite spec pharma stocks because of its mgt team, b-model, and the niche assets in the portfolio/pipeline. For Xyrem we believe mid-to-high single digit increases in both volumes as well as pricing is possible over the next few years and that there is a good chance generics don't enter until the middle of the next decade."

UBS sees peak sales of $300-$400 million for Erwinsase, Defitelio, and Vyxeos. As far as JZP-110 is concerned, it has the potentials to deliver even bigger revenue. The analyst also sees the management to be more aggressive in respect of M&A/BD so that it does not depend on Xyrem alone.

Therefore, the brokerage maintained its Buy rating and a price target of $168 on shares.