
With its manufacturing issues seemingly in the rear view mirror, Research Capital analyst Andre Uddin has upgraded Theratechnologies (Theratechnologies Stock Quote, Chart, News, Analysts, Financials NASDAQ:THTX).
In a research update to clients October 21, the analyst changed his rating on THTX from “Hold” to “Speculative Buy” while maintaining his price target of $3.80 on the stock. The analyst explained the reasoning behind the move.
“We are upgrading THTX to a Speculative Buy Rating with a Target Price of $3.80 (all nos in US$). On Sep 18, 2024 we downgraded the stock to a HOLD (from a BUY and a target price of $4.85) due to a risk of supply disruption of lead drug EGRIFTA SV. Manufacturing issues for a drug are never easy issues to analyze as the timing of a resolution isn’t easy to determine. This is not the first time Theratechnologies experienced manufacturing issues with Egrifta, it also occurred in 2013 and 2014 – at that time, the company resumed Egrifta production on Sept 3, 2014. It was during that 2013/2014 Egrifta supply issue period which marked a multi-year low for the stock – we believe this current issue could result in a similar move back up like it had from the 2013/2014 lows. Also to consider, THTX’s manufacturing partner Jubilant has historically had multiple FDA infractions over the past several years and each time those issues have gotten resolved. Two near term catalysts could potentially override the current Egrifta manufacturing issues. The company’s new F8 Egrifta formulation should be refiled with the FDA by the end of November – a 4 month review is expected. The F8 formulation should be a driver of future Egrifta growth. Data for TH1902 (oncology drug candidate) should be out by the end of the year. Our upgrade has risks, as this current Egrifta issue is not yet resolved, of note the stock has not broken down to new lows, indicating to us that the manufacturing issue should get worked out. We are recommending investors with a higher risk tolerance should consider buying THTX at these levels. We are upgrading THTX’s stock to a Speculative Buy Rating with a TP of $3.80 based on applying the average 2025 EV/Sales multiple for Canadian specialty pharma companies with a market cap <$500M to THTX’s estimated 2025 revenue.
Uddin thinks THTX will post EPS of $0.03 on revenue of $84.0-million in fiscal 2024. He expects those numbers will improve to EPS of $0.07 on a topline of $87.0-million in fiscal 2025.
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