Negative Press Doesn't Change UBS View on Horizon Pharma (HZNP)
UBS analyst Marc Goodman, published a note on Horizon Pharma (NASDAQ: HZNP) in the wake of negative press:
Express Scripts (NASDAQ: ESRX) is suing Horizon for $140M of owed rebates under a contractual agreement that Horizon disclosed it terminated in 3Q14 for material breaches. Also, ESRX terminated its contract with Linden Care, which is one of the specialty pharmacies that Horizon uses and represents <5% of Horizon’s sales.
The analyst believes that if Linden were shut down, Horizon might lose some short-term sales, but Horizon would likely just find another pharmacy. Its understandable why ESRX would be upset with Linden as these pharmacies help pharma (including Horizon) get around PBM constraints put on the pharma Rxs. But it also appears that ESRX is struggling with changing the practices of the specialty pharmacies in its normal course of business.
In a normal environment, we don’t believe an issue of this size would cause a ~$800M move in market cap. That said, given the recent events at Valeant and negative press around specialty pharmacies in general, investors appear concerned that this is the beginning of a chain of negative announcements regarding the reimbursement supply chain for Horizon.
Maintaining Buy rating and PT of $42
For an analyst ratings summary and ratings history on Horizon Pharma click here. For more ratings news on Horizon Pharma click here.
Shares of Horizon Pharma closed at $17.99 yesterday.