Valeo Pharma has a 178 per cent upside, says Echelon

Solid top and bottom line growth are the right prescription for Valeo Pharma (Valeo Pharma Stock Quote, Charts, News, Analysts, Financials TSX:VPH), according to Echelon Capital Markets analyst Stefan Quenneville, who reviewed just-released quarterly results from Valeo in a Wednesday update to clients. Quenneville reiterated a “Speculative Buy” rating on the stock, saying VPH represents a compelling investment opportunity.

Specialty pharma company Valeo has a focus on respiratory, specialty and hospital generic products in Canada, including the Atectura and Enerzair Breezhalers, thrombosis and pulmonary embolism drug Redesca and Simbrinza ophthalmic drops for openangle glaucoma or ocular hypertension.

The company reported on Tuesday a sixth consecutive quarter of revenue growth in its fiscal second quarter 2023 for the period ended April 30, 2023, and also the sixth consecutive quarter of adjusted EBITDA growth. Valeo said Enerzair and Atectura prescriptions were up 355 per cent year-over-year and up 29 per cent sequentially and total prescriptions for the 12 months ended April 30 were up 654 per cent from a year earlier.

By the numbers, Q2 revenue was $13.6 million and adjusted EBITDA was a loss of $1.7 million.

“Our second quarter financial and commercial performance was robust  and reflects our strong product portfolio and dynamic commercial team”, said Steve Saviuk, Valeo’s Chief Executive Officer, in a statement.

Quenneville called the Q2 numbers release largely a non-event, seeing as management had preannounced guidance recently, with projected revenue having come in below expectations while EBITDA was a solid beat.

The analyst has left his forecast materially unchanged after the quarterly announcement and he said he anticipates Valeo will continue its consistent march towards profitability (expected by Quennevill by the calendar year end).

“With revenues growing 184 per cent year-over-year in the quarter and its sales, marketing, and corporate infrastructure now largely in place, we believe the Company will demonstrate significant operating leverage going forward as it commercializes its promising, high-growth portfolio and potentially adds new, synergistic products. As such, we continue to view VPH as a compelling opportunity for investors and reiterate our Spec. Buy rating and $1.00/shr target price,” Quenneville wrote.

Quenneville is now calling for Valeo to deliver full fiscal 2023 revenue of $61.3 million and EBITDA at negative $5.9 million and moving to 2024 revenue at $90.8 million and EBITDA at positive $9.1 million.

At press time, the analyst’s reiterated $1.00 target represented a projected one-year return of 178 per cent.