Wall Street Giddy About Dendreon (DNDN) After Provenge Approval; Where Are Shares Headed?

Shares of Dendreon (Nasdaq: DNDN) are trading significantly higher, and moving upward, as the company received U.S. FDA approval for their Provenge prostate cancer treatment late yesterday. Shares are up 13.49%, after closing 26% higher yesterday.

But how much room is left to run in the stock? Is the earnings power from the drug sales already priced in? In 2009, shares saw an increase of 473.8%, and 906.9% from lows of $2.61 seen on March 6, 2009. However, the company notes that in the near-term they will only be able to supply 2,000 treatments to patients. At a cost of $93,000 per treatment, this could add up to $186 million to their top line.

The following provides that analyst's take on the recent approval, and potential for the stock to run in the future:

• Robert W. Baird raised their price target to $64, and is maintaing their Outperform rating on the shares. An analyst at the firm says: "With potential Provenge revenue within striking distance of $100M this year, growing to $1.8B in 2014, our model indicates fair value in the mid-$60s."
  
  
• Wells Fargo raised its valuation range from $47 - $52 to $63 - $70. They value based on a Provenge revenue estimate of $1.7 billion capitalized at 9 - 10x and discounted 15% to arrive at a valuation range of $8.9 - $9.9 billion. $1.7 billion comes from an estimated 17,977 U.S. patients treated at $90,000/year, and 253 in Europe.
  
  
• Brean Murray raised their price target on Dendreon Corp. (Nasdaq: DNDN) from $50 to $65 and maintains their Buy rating. The firm raised estimates now that the pricing is $93K per patient, up from their estimate of $80K. The firm said with the label not restricting, they see a maximum market potential of about $2.8 billion in the U.S. alone. They als oview DNDN as a natural acquisition target.
  
  
• Needham & Company lifted their price target on from $38 to $62, and maintained their Buy rating. The firm said other than approval other positive includes: pricing at $91K, a favorable label that will allow for broad marketing strategy in the target population, and the recent addition of experienced operational and marketing talent at Dendreon serves to decrease the commercial risk. Needham & Copany said that positive label news, which allows for a broad market strategy, made them change their model for the increased potential. They are anticipating FY10 revs of $78 million.
  
  
• Leerink Swann moved to a "street high" price target of $80 from $40 prior. The firm maintained an Outperform rating. They allude to DNDN likening to Celgene Corp. (Nasdaq: CELG), in that "one of the rare cases in biotech where a small biotech company has taken a potential blockbuster drug for a big indication all the way to the finish line while maintaining full worldwide rights" They note that Provenge doesn't have the same market expansion potential that comes from repeated treatment and maintenance.
  
  
• Canaccord Adams reiterates a 'Buy' rating, and raises their price target to $62.
  
  
• J.P. Morgan maintains an 'Overweight' rating, and raised their price target from $46 to $66.
  
  
• Citi increased their price target from $40 to $50, and maintains an Outperform rating on the shares.
  
  
• Rodman & Renshaw raised their price target to $63 from $35 previous, and maintained a Market Perform rating on the stock.

Currently, data from Bloomberg shows that 10 analysts have a Buy rating on the stock, 4 have a Hold, and 1 recommend to Sell. The analyst average price target is $61, with a high of $65, and a low of $50.

The company is expected to release their first quarter earnings on Monday, May 3, 2010.

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