Canaccord Genuity maintains buy on Theratechnologies following Q3 results

Theratechnologies (Theratechnologies Stock Quote, Chart, News: TSX:TH) third quarter results were a little softer than he expected, but Canaccord Genuity analyst Neil Maruoka is sticking to his guns on the stock.

On Thursday, Theratechnologies reported its Q3, 2017 results. The company lost $2.88-million on revenue of $11.22-million, a topline that was 26 per cent higher than the same period last year. The company also revised its guidance downward due to foreign exchange pressures.

“With three-quarters into our fiscal year, our business plan is very much on track,” said CEO Luc Tanguay. “Sales of EGRIFTA are growing and the ibalizumab file is progressing as we anticipated. In fact, we are even ahead of our plan for ibalizumab in Europe as we started investing in regulatory work much sooner than we expected. During our last quarter, EGRIFTA sales were up 26 per cent compared to the same quarter last year, ibalizumab was accepted for filing and is currently being evaluated under priority review and the Food and Drug Administration gave a prescription drug user fee act (PDUFA) target action date of Jan. 3, 2018, for the ibalizumab application. While we are pleased with those accomplishments, we remain more than ever focused on making sure that we spare no effort to support the successful launch of ibalizumab.”

Maruoka says this quarter was slightly below his estimates, but adds that he takes a longer view of the stock.

“Although revenue and expenses were generally in line, a minor variance on the top line and slightly higher expenses resulted in adjusted EBITDA that was below our estimate,” the analyst says. “As expected, the company continues to invest in its commercial infrastructure in preparation for the launch of ibalizumab in the first half of next year, and elevated SG&A expenses in Q3 were in line with our expectations. Nonetheless, with the potential FDA approval of ibalizumab expected within the next few months, we do not believe that quarterly financial fluctuations are of concern.”

In a research update to clients Friday, Maruoka maintained his “Buy” rating and one-year price target of $9.50 on Theratechnologies, implying a return of 22.4 per cent at the time of publication.

Maruoka thinks Theratechnologies will generate EBITDA of negative $5.3-million on revenue of $42.9-million in fiscal 2017. He expects those numbers will improve to EBITDA of positive $46.8-million on a topline of $89.6-million the following year.