Forecasting a more gradual ramp up for its lead product, Stifel analyst Justin Keywood has trimmed his price target on HLS Therapeutics (HLS Therapeutics Stock Quote, Chart, News, Analysts, Financials TSX:HLS).
In a research update to clients September 18, Keywood assigned a “Buy” rating to HLS but changed his one-year price target from $15.00 to $12.25.
The analyst explained the reasoning behind the action.
“We provide an update on Vascepa Canada Rx data that shows continued progression in prescription count, growing at 91% YoY for the month of August,” the analyst wrote. “HLS has guided for Vascepa 2023 sales of C$18-$20mm (22% of total), up ~35% YoY at the midpoint and expects the drug to generate +$100mm by 2028. The prescription data trends and a resetting of expectations by HLS’ new CEO, highlights still visibility of good growth for several years with above average margins. However, the inflection embedded in 2024 forecasts needs to be re-set to what is achievable, barring any new developments. As a result, our target price re-sets to C$12.25 but still showing substantial upside. HLS is trading at ~9x/7x our refined 2023/2024 forecasts, and very reasonable levels for the growth and margin profile ahead, along with defensive attributes embedded for healthcare assets.
Keywood thinks HLS will post EBITDA of $21.6-million on revenue of $65.4-million in fiscal 2023. He expects those numbers will improve to EBITDA of $26.2-million on a topline of $72.8-million the following year.
The analyst outlined his Investment Thesis on HLS Therapeutics.
“We see HLS Therapeutics as a unique specialty pharma company with a strong but undervalued cash flow platform in place to leverage new growth,” he said. “We have performed extensive due diligence on HLS’ current platform of products, including speaking to many medical contacts, including doctors and industry experts. From this due diligence, we believe there are certain benefits to the platform that are not reflected in the stock price.”
Shares of HLS closed September 18 at $5.00.
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