JPMorgan Downgrades Pacira Pharmaceuticals (PCRX) to Underweight

JPMorgan analyst Hardik Parikh downgraded Pacira Pharmaceuticals (NASDAQ: PCRX) from Overweight to Underweight with a price target of $10.00 (from $45.00).

The analyst comments: "On Friday, Judge Cox Arleo ruled that Pacira's '495 patent on Exparel is not valid (and thus no infringement by eVenus's ANDA product), and eVenus is now free to launch gExparel at risk. As we neared the Judge's decision, we previewed that an unfavorable ruling for Pacira was the most likely outcome, but this ruling is clearly the worst case scenario in which we expected shares to drop to the low-teens. Exparel composes ~80% of PCRX's revenue, the vast majority of which will likely get eroded if PCRX can't successfully defend other patents. It is also the main source of growth as the company's other two assets are relatively immaterial, and the Street doesn't ascribe much value to the company's R&D pipeline. Furthermore, the appeal process and litigation of other Exparel patents will likely take years, and Friday's invalidity ruling potentially casts doubt on the strength of the remaining patents. We see a substantial overhang on shares for the foreseeable future, and we think investors will instead shift their focus to cleaner stories elsewhere in the space. As such, we don't see a clear path to recovery for PCRX shares in the near term and hence downgrade to UW rating (from OW previously)."

For an analyst ratings summary and ratings history on Pacira Pharmaceuticals click here. For more ratings news on Pacira Pharmaceuticals click here.

Shares of Pacira Pharmaceuticals closed at $11.70 yesterday.

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