Clarus Securities raises price target on HLS Therapeutics

In a research update to clients Friday, Atkinson maintained his “Buy” rating on HLS but raised his one-year price target on the stock from $29.00 to $31.00, which implied a return of 89.4 per cent at the time of publication.

“Given generally positive results from reviews by CADTH and PMPRB, which boost the likelihood of broad adoption of Vascepa by public health plans and gave additional support to HLS’s list price, HLS has increased its peak sales outlook (in 4-5 years from launch) to C$275-325MM from C$200-300MM previously,” the analyst said. “We have raised our peak sales target to C$288MM (from C$257MM).”

Atkinson thinks HLS will post Adjusted EBITDA of (US) $19.3-million on revenue of $52.7-million in fiscal 2020. He expects those numbers will improve to EBITDA of $25.2-million on a topline of $81.0-million the following year.

“Our target price (based on a DCF valuation model) rises to C$31.00 per share (from $29.00), due mainly to our increased Vascepa peak sales estimate,” the analyst added. “We also continue to see potential for much higher patient adoption of Vascepa than the 8-10% penetration rate assumed by management.”

Atkinson said investors shouldn’t fret about the company’s CEO change, arguing that Gilbert Godin is a fine replacement for outgoing boss Greg Gubitz.