Is Cipher Pharmaceuticals (TSX:CPH) a buy?

Research Capital analyst Andre Uddin says Cipher Pharmaceuticals’ (Cipher Pharmaceuticals Stock Quote, Chart, News, Analysts, Financials TSX:CPH) weaker Q2 has pressured the stock, but he sees the pullback as a buying opportunity.

In an Aug. 12 update, Uddin maintained his “Buy” rating and $21.30 target on Cipher.

“Based on the weaker Q2, Cipher’s stock has traded down, but we believe long-term investors should view it as a buying opportunity,” Uddin said. “Management’s key focus is adding new products to its portfolio — hence a new acquisition is probable by the end of 2026.”

Cipher reported Q2 revenue of US$12.1-million, below Uddin’s US$12.9-million estimate and consensus at US$13.6-million. Revenue was down 9.8% from US$13.4-million a year earlier.

Product sales were US$10.9-million, below Uddin’s US$12.2-million forecast and down from US$11.9-million a year earlier. Excluding Natroba, product sales increased about 12% year-over-year.

Natroba sales were US$6.3-million, down from US$6.9-million in Q1 and US$7.8-million a year earlier. Uddin said sales were pressured by a reduction in Medicaid-covered patients in the U.S.

Adjusted EBITDA was US$6.8-million, below Uddin’s US$7.9-million estimate and consensus at US$7.8-million. Net income was US$4.0-million, or 15 cents per diluted share, compared with US$5.9-million, or 22 cents per diluted share, a year earlier.

Cipher ended Q2 with US$9.1-million of cash and no long-term debt.

Uddin said Cipher is working to offset Natroba pressure by building a direct-to-patient platform and expanding retail access. The company has reached an agreement with Walmart to make Natroba and Spinosad available at every U.S. store and is in discussions with other large pharmacy chains.

“Cipher’s current strategy is to remain focused on its cash flow while delivering shareholder value,” Uddin said.

The analyst said management is focused on growing U.S. Natroba sales, seeking Health Canada approval for Natroba, out-licensing Natroba and Epuris outside North America and acquiring new products, likely in dermatology.

Uddin expects Cipher to generate Adjusted EBITDA of US$29.9-million on revenue of US$50.6-million in fiscal 2026, improving to Adjusted EBITDA of US$44.4-million on revenue of US$68.9-million in fiscal 2027.

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