Ladenburg ups Ironwood target to $18
January 15, 2013 by Jennifer Poland
Ladenburg Thalmann has raised its price target on “buy-rated” Ironwood Pharmaceuticals (NASDAQ:IRWD) to $18 from $16, saying that until recently three factors had depressed the company’s valuation.
They include a financing overhang, the potential for Synergy Pharmaceuticals’ (NASDAQ:SGYP) plecanatide to generate competitive clinical data, and expectations on a soft Linzess launch by Ironwood’s partner, Forest Labs (NYSE:FRX), and/or weaker than expected long-term prospects.
“In our opinion, the recent $175-million debt financing and undifferentiated (in our view) plecanatide Phase 2 data in chronic constipation have removed some of the overhang on Ironwood’s shares for the time being,” writes analyst Dr. Juan Sanchez.
He also noted that the company’s existing funds are enough to finance operations for 24 months or more, depending on Linzess’ revenues and Ironwood’s pipeline success. Ironwood shares are quoted at $14.75 on Tuesday afternoon.
Dr. Sanchez said he was optimistic about initial Linzess adoption and long-term prospects. Linzess was launched on Dec. 17, 2012, with Forest Labs reporting revenues of $19.2-million for the quarter ended Dec. 31, 2012.
“We believe it is too early in the launch to make conclusions despite what the high initial inventory stocking could be telling (for a strong initial uptake) to some,” Dr. Sanchez pointed out.
He is forecasting Linzess’ U.S. revenues of $237-million and $475-million for fiscal 2014 and fiscal 2015, respectively. He also expects the Linzess commercial collaboration with Forest to generate profits in 2015.