BMO Capital affirms Horizon Pharma (Nasdaq: HZNP) at Outperform with a price target of $29 after the company announced that two of its primary care products Duexis and Vimovo were removed from the 2017 CVS/Caremark exclusion list.

Analyst Gary Nachman commented today, We view this announcement as an important win for HZNP. It demonstrates that it is improving its execution on the managed care front as the company has worked on building out its managed markets team. CVS/Caremark represents 25% of total covered lives in the country, and our understanding is that they are particularly difficult when it comes to negotiations with pharma companies. ESRX represents about 30% of total covered lives in the country, so if those discussions are successful that could be a nice upside surprise (we wouldn’t expect to hear an update for at least several weeks on that). Any potential partnerships with other large payers would likely come much later in the year. We are very pleased to see HZNP’s efforts in the managed care area as this has been a hot button issue for many investors in the specialty pharma sector, and it can certainly help with the sustainability of growth in its portfolio.

We continue to believe it’s worth owning HZNP as it transitions to more of an orphan drug story (including Actimmune for Friedreich’s ataxia with Phase 3 data late this year), while it continues to generate very strong cash flow from its primary care business and has low leverage on its balance sheet. HZNP reports 2Q earnings on August 8, and solid results could help continue the positive momentum in the stock, the analyst noted.

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