Questcor rises analyst sees greater Acthar sales

Questcor shares up as analyst raises target, Acthar sales estimate on cut to Medicaid rebate

Associated Press

NEW YORK (AP) -- Shares of Questcor Pharmaceuticals Inc. rose Tuesday after an Oppenheimer & Co. analyst raised his price target on the stock, saying the company will likely get more revenue from its H.P. Acthar gel.

THE SPARK: Analyst Christopher Holterhoff maintained an "Outperform" rating on Questcor shares and boosted his price target to $69 per share from $59. He said it is very likely that Medicaid will lower its reimbursement rates for Acthar gel, meaning the company won't have to cover as much of the cost of the product and will get significantly more revenue from sales to the government program.

Holterhoff now expects Questcor to report $687 million in Acthar revenue in 2013, up from $590 million. He added that investors are getting more comfortable with the risks Questcor faces, and the stock should become more stable.

THE BIG PICTURE: Questcor markets Acthar gel as a treatment for multiple sclerosis, infantile spasms, neuromuscular conditions, and a kidney condition called nephrotic syndrome. A large portion of Acthar orders come from Medicaid, and Questcor does not get any revenue from those sales because it is required to pay full rebates to state Medicaid programs that buy the drug.

On Sept. 4, the Anaheim, Calif., company said the government was willing to reduce the rebate amount. Questcor said it is applying for that reduction and that the rebate could be lowered from 100 percent to 23.1 percent in three to six months.

SHARE ACTION: Shares of Questcor gained $1.98, or 4 percent, to $52.09 in midday trading. The shares are 15 percent since Questcor disclosed the planned change in Medicaid rebates for Acthar, and the stock is up 42 percent since Aug. 5.

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