TH stock has an upside of 185%, Leede Jones Gable says

Following the company’s third quarter results, Leede Jones Gable analyst Douglas Loe remains bullish on Theratechnologies (Theratechnologies Stock Quote, Chart, News, Analysts, Financials TSX:TH)

On September 26, TH reported its Q3, 2023 results. The company posted revenue of $20.86-million, a slight beat over the $20.81-million topline in posted in Q3, 2022.

“Theratechnologies reported quarterly revenue of $21-million, demonstrating a solid recovery as compared to the prior quarter. While new prescription growth continues on a strong path, we also crossed major milestones in the advancement of our pipeline and the life cycle management of our commercial products,” said Paul Levesque, president and chief executive officer. “We are particularly pleased to report a strong cash balance and adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] of $2.2-million in the third quarter, which was promised at the beginning of the year and delivered ahead of schedule.

“We continue to execute on value creation in our pipeline. A PDUFA date for the F8 formulation, the next generation of EGRIFTA SV, is expected in the upcoming quarter and will position our commercial franchises for additional revenue growth potential. As such, we are laser-focused on improvements to the bottom line through the remainder of 2023 and into the new year,” concluded Mr. Levesque.

Loe says his bottom line on the quarter is that the economics of Egrifta and Trogarzo alone justifies his current rating.

“We are maintaining our Speculative Buy rating and one-year PT of C$8.00 on TH (was C$2.00, but adjusted for the four-for-one share consolidation completed last quarter), based on multiples of our F2026 EBITDA/fd EPS forecasts (US$29.8M & US$0.44, respectively) and with our EV calculation now incorporating FQ323 balance sheet data (cash of US$22.9M/C$30.8M and total debt of US$57.1M/C$76.9M) and consolidated fully diluted S/) of 29.8M. Our F2023 revenue forecast of US$86.0M is at the top-end of the US$82M-to-US$87M guidance range that Thera projected during its last quarterly update.”

Loe thinks TH will post EBITDA of negative $6.1-million on revenue of $86.0-million in fiscal 2023. He expects those numbers will improve to EBITDA of positive $300,000 on a topline of $93.4-million the following year.

Loe’s price target implied a return of 185 per cent at the time of publication.