Piper Jaffray Remains Bullish on Horizon Pharma (HZNP) Despite Sell-Off; Says Business is Sustainable
Piper Jaffray maintained an Overweight rating on Horizon Pharma (NASDAQ: HZNP), and cut the price target to $44.00 (from $46.00), following the company's 4Q earnings report. Horizon reported adjusted EPS of $0.63 on revenues of $245M, coming in ahead of Street estimates. Sales from the primary care business grew 10% sequentially in 4Q15 over 3Q15, with management citing continued volume growth for Pennsaid 2%, Duexis, Vimovo and Rayos.
Analyst David Amsellem commented, Horizon reported 4Q15 adjusted EPS of $0.63 on revenues of $245M, just ahead of Street estimates, with strong performance in both the primary care and rare disease segments (the primary care segment showed sequential sales growth of 10% over 3Q15). With HZNP disclosing a federal government investigation into its patient assistance programs and broader marketing practices (certainly not uncommon in the broader pharma space), the sell-off in the shares underscores how the broader market is reflexively concluding that Horizon’s behavior/practices mirror that of Valeant. That is simply not the case (refer to our note on 11/11/15 for more details). HZNP shares currently are trading at levels (a 2016 P/E of 7x our estimate) that suggests that earnings are not sustainable. That is also simply not the case. We reiterate our Overweight rating and are slightly lowering our PT to $44 from $46 PT, reflecting modest estimate adjustments.
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Shares of Horizon Pharma closed at $19.79 yesterday.