Shares of Jazz Pharmaceuticals (JAZZ) reached a 52-week high of $72.64 on Jul 5, 2013. The closing price of $72.12 of the company reflects a robust year-to-date return of 32.1%.
The specialty biopharmaceutical company has a market cap of $4.2 billion. Average volume of shares traded over the last three months stood at approximately 1,021.3K.
The Growth Story
Shares of the company started escalating following the release of its impressive first quarter results on May 7, after the close of the financial markets. The increase can be attributed to strong first quarter results and an upwardly revised guidance.
Jazz Pharma raised its 2013 adjusted earnings guidance to $6.10 to $6.30 per share, up from the earlier guidance of $5.70 to $5.90. The company also revised its revenue guidance for 2013 upwards to $830–$860 million from the earlier range of $805–$835 million.
Performance of the company’s key growth drivers, Xyrem and Erwinaze, were promising in the first quarter of 2013. While Xyrem sales increased 60% to $117.5 million, Erwinaze generated revenues of $41.8 million, up 27.1% year over year.
Both products are witnessing strong demand, which is expected to boost revenues. Xyrem net sales in 2013 are expected in the range of $540–$555 million as compared to $378.7 million in 2012. In 2013 Erwinaze net sales are expected in the range of $150–$175 million compared with $72.1 million in the prior year.
On a price-to-sales basis Jazz Pharma is trading at 6.5x, reflecting a huge premium of 103.1% compared with the peer group average of 3.2x. On a price-to-book basis, the stock is also trading at a premium to the peer group average. Given the company’s strong fundamentals, the premium valuation is justified.
For 2013, the Zacks Consensus Estimate moved north 4.3% to $5.58 per share over the last 90 days. For 2014, the Zacks Consensus Estimate moved up 10.5% to $7.28 per share over the same time period.
Jazz Pharma carries a Zacks Rank #1 (Strong Buy). Other Zacks Rank #1 companies include Salix Pharmaceuticals (SLXP), Valeant Pharmaceuticals (VRX) and Santarus, Inc. (SNTS).
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