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Good Entry Point for Amarin Stock? Not Just Yet, Says Analyst

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Many companies will be glad to put 2020 behind them and you can certainly add Amarin (AMRN) to the list. Similarly, to other names, Covid-19 has played its part in the struggle, but the coronavirus has only exacerbated Amarin’s other non-macro related problems.

Namely, the loss of a patent case and subsequent appeal for the company’s high triglyceride treatment Vascepa. Generic drug makers Hikma Pharmaceuticals and Dr. Reddy’s won against Amarin and now plan on bringing their own generic versions to market.

That said, sales of Vascepa – Amarin’s sole product - did come ahead of analysts’ expectations in the company’s recent Q3 earnings report. At $156.5 million, sales increased by 39% year-over-year and beat consensus by $1.87 million.

However, Oppenheimer analyst Leland Gershell reminds investors the revenue uptick was countered by a “proportionately higher increase in SG&A expense.” At 46% year-over-year, the rising outlay fuels Gershell’s “long-standing concern that sustainable franchise profitability will be elusive.”

There are other issues, too. Covid-19 will “continue to be a meaningful drag on near-term growth,” with winter approaching and the specter of further lockdowns making it difficult for Vascepa to “post meaningful growth through year-end.” Additionally, despite Amarin’s request for an en banc review, a patent decision reversal on Vascepa is unlikely.

Furthermore, Gershell believes Amarin’s plan to compensate for the loss of US Vascepa sales with a commercial push in Europe amounts to a questionable opportunity.

“AMRN anticipates EMA approval in early 2021 and is in the process of hiring sales representatives and conducting market access negotiations in Europe,” the analyst said. “Given the lackluster picture registered by Vascepa in its US commercialization, we have little reason to believe Vascepa will fare better in the fragmented and incrementally cost-sensitive European pharma market.”

As a result, Gershell sticks to his Market Perform (i.e. Hold) rating, without suggesting a price target. (To watch Gershell’s track record, click here)

There are 4 other analysts who think along the same lines and currently recommend the stock a Hold, too. However, with 7 additional Buys, the analyst consensus for Amarin is a Moderate Buy. Meanwhile, the average price target, at $10.64, implies a hefty 149% premium over the next 12 months. (See AMRN stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.