United Therapeutic’s Corporation (UTHR, Financial) saw its shares rise 2% on Tuesday after the US FDA administration approved one of its cancer drugs that helps treat an aggressive and rare form of cancer typically being found in kids below the age of five.
Unituxin combats high-risk neuroblastoma, a cancer that is found in young children and is formed from immature nerve cells. It starts in the adrenal glands but can also develop in the abdomen, chest or the nerve tissue near the spine. The National Cancer Institute declared neuroblastoma is found in approximately one of 100,000 children is a bit more common in boys. Patients with high-risk neuroblastoma have almost a 40 to 50 percent chance of long term survival in spite of aggressive therapy.
Going forward with the fight against cancer
This approval has consensus estimates aimed at a paltry $73 million in annual sales from the drug by the year 2019 due to the fact that there are only 650 new cases a year. It seemed a happy time for the market that saw United Therapeutics stock hit a record high of $164.82. In 12 hours, shares were up past the 1% mark hovering around $162.50.
One needs to note the high demand for rare-disease treatment drugs. The FDA gave United Therapeutics a Paediatric Priority Review Voucher, meaning the company can sell this to another company as per their choice, expediting a review once the buyer registers a fresh drug application.
In the case of rare disease treatment drugs, companies such as Regeneron Pharmaceuticals and Sanofi invested $67.5 million to obtain a similar voicher from BioMarin Pharmaceuticals in order to bring the first ever cholesterol fighting PCSK9 inhibitor to consumers.
The company’s perceived value
Though most of the Wall Street stalwarts have downgraded their outlook about United Therapeutics’ shares from buy to hold guidance,Wedbush’s analysts gave their opinion of an ‘outperform’ rating while marking a $195 price target on United Therapeutics’ shares in their own research note released on Sunday, March 8. HC Wainright’s analysts gave United Therapeutics a ‘buy’ rating in their own research note on Friday, March 6 setting a $175.00 price on the company’s shares. JP Morgan Chase & Co’s analysts raised share price target of United Therapeutics from $132.00 to $138.00 while giving them a ‘neutral’ rating in their own research note on March 4. Two individual research analysts are rating the stock with a sell rating while seven are assigning a hold rating. Finally, two research analysts have given United Therapeutics a buy rating to the company. The general consensus rating is a ‘Hold’ while the average stock price is $135.91.
United Therapeutics’ 50 day moving average measures $150, while its 200 day moving average is $132. They have a market cap of $7.65 billion with a ratio of 26.09 with regards to price-to-earnings.
In their latest earnings data released in February, the data showed United Pharmaceuticals’ stock costing $3.21 per share, which exceeded the consensus prediction by over $1. The pharmaceutical company had revenue of $346.40 million for the quarter, compared to the consensus estimate of $336.22 million. At the same quarter in 2014, United Therapeutics posted earnings of $3.19 per share. The company’s revenue for the quarter rose 19.9% on a Y-O-Y basis while analysts predicted the company would post earnings per share of $9.73 for 2015’s fiscal year.
Analysis
With such a volatile stock in such a limited market, the smart money says to hold on investing in United Therapeutics. It would advisable to follow the rating of the majority of research analysts who have given the pharmaceutical company a ‘hold’ rating. One can presume to invest in the company at the end of the quarter post positive results.
