AMAG Raised to Strong Buy


On Nov 29, Zacks Investment Research upgraded AMAG Pharmaceuticals, Inc. (AMAG) to a Zacks Rank #1 (Strong Buy). With a strong year-to-date return of 55.5% and a positive estimate revision trend, AMAG is an attractive investment opportunity.

Why the Upgrade?

AMAG reported narrower-than-expected loss in the third quarter of 2013, results of which were announced last month, due to higher-than-expected revenues. The third quarter results included a positive surprise of 90.91%. In fact, this specialty pharmaceutical company delivered positive earnings surprises in 3 of the last 4 quarters.

AMAG recorded revenues mainly from Feraheme in the third quarter of 2013. Feraheme is an injectable drug for the treatment of iron deficiency anemia (IDA) in adults suffering from chronic kidney disease (:CKD). Feraheme contributed $19.3 million to the company’s top line in the third quarter, up 19.5% year over year.

AMAG is looking to expand Feraheme’s label to include all IDA adult patients who have failed or could not tolerate oral iron. In Dec 2012, the company submitted a supplemental new drug application (sNDA) to the U.S. Food and Drug Administration (:FDA) for Feraheme. A final decision from the U.S. regulatory body is expected by Jan 21, 2014.

Apart from Feraheme, AMAG now has another marketed product, MuGard, an oral mucoadhesive for managing oral mucositis.

Based on its strong third quarter 2103 results, the company now expects to generate total revenues in the range of $78–$81 million (previous: $77–$80 million) and Feraheme U.S. sales in the range of $69 million to $71 million (previous: $67−$70 million) in 2013. AMAG also expects to generate around $9−$10 million from revenues from other sources. We expect Feraheme to continue performing well, thereby driving growth at AMAG.

Other Stocks to Consider

Some other stocks worth considering include Actelion Ltd. (ALIOF), Jazz Pharmaceuticals Public Limited Company (JAZZ) and Vanda Pharmaceuticals, Inc. (VNDA). While Actelion and Jazz Pharma hold a Zacks Rank #1 (Strong Buy), Vanda carries a Zacks Rank #2 (Buy).

Read the Full Research Report on ALIOF
Read the Full Research Report on AMAG
Read the Full Research Report on JAZZ
Read the Full Research Report on VNDA

Zacks Investment Research

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