Here's Why You Should Add Lantheus (LNTH) to Your Portfolio
Lantheus Holdings, Inc. LNTH has been gaining from its focus on pipeline development. The optimism led by a solid fourth-quarter 2023 performance and strength in radiopharmaceuticals are expected to contribute further. However, dependence upon third parties and macroeconomic concerns are major downsides.
Over the past year, the Zacks Rank #1 (Strong Buy) stock has lost 8.8% against the 7.8% gain of the industry. The S&P 500 has witnessed 28.7% growth in the said time frame.
The renowned radiopharmaceutical-focused player has a market capitalization of $4.54 billion. The company projects 0.6% growth for 2024 and expects to witness continued improvements in its business. Lantheus’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average earnings surprise being 14.8%.
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Let’s delve deeper.
Pipeline Development: We are optimistic about Lantheus actively developing its pipeline with promising assets like PNT2002 and PNT2003. In December 2022, the company announced the closing of a set of strategic collaborations with POINT Biopharma Global Inc. (POINT). This granted Lantheus a license to exclusive worldwide rights (excluding Japan, South Korea, China including Hong Kong, Macau and Taiwan; Singapore and Indonesia) to co-develop and commercialize POINT’s PNT2002 and PNT2003 product candidates.
Strength in Radiopharmaceuticals: Lantheus has established itself as a leader in the radiopharmaceutical sector, particularly in prostate-specific membrane antigen (PSMA) positron emission tomography (PET) imaging, where its product, PYLARIFY, has a strong demand. Based on estimates from third-party sources regarding the incidence of prostate cancer in men in the United States, Lantheus believes the market potential for PSMA PET imaging agents in the United States could be up to 350,000 annual scans, comprised of 125,000 scans for patients with an intermediate, unfavorable or high or very high risk of suspected metastases of prostate cancer and 195,000 scans for patients with suspected recurrence of prostate cancer, among others.
Strong Q4 Results: Lantheus saw solid top-line and bottom-line performances in fourth-quarter 2023. Strong segmental performances were also registered, with continued strength in PYLARIFY and DEFINITY. The expansion of gross margin was also seen.
Downsides
Macroeconomic Concerns: Lantheus’ operational and financial success are significantly influenced by various factors, many of which are outside its control. The current economic environment and financial market conditions present unpredictable challenges to the business. There is a risk of reduced demand for healthcare services and pharmaceuticals due to various factors, which could affect revenues. This, in turn, might result in delayed or canceled orders, impacting the company's financial stability and liquidity.
Dependence Upon Third Parties: PYLARIFY is produced by a network of PET manufacturing facilities (PMFs) across the nation, each requiring separate FDA approval. Despite ongoing efforts to qualify additional PMFs, there's uncertainty regarding the FDA's continued approvals and the PMFs' manufacturing capabilities, which could impact Lantheus’ future operations and financial health.
Estimate Trend
Lantheus has been witnessing a positive estimate revision trend for 2024. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 3.1% north to $6.27.
The Zacks Consensus Estimate for first-quarter 2024 revenues is pegged at $334 million.
Other Key Picks
A few other top-ranked stocks in the broader medical space are DaVita Inc. DVA, Cardinal Health, Inc. CAH and DexCom, Inc. DXCM.
DaVita, sporting a Zacks Rank #1, has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 51.2% compared with the industry’s 12.6% rise in the past year.
Cardinal Health, flaunting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.9%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 39.6% compared with the industry’s 14.9% rise in the past year.
DexCom, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 33.1%. DXCM’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 32.8%.
DexCom’s shares have rallied 5.1% compared with the industry’s 11% rise in the past year.
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DaVita Inc. (DVA) : Free Stock Analysis Report
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
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Lantheus Holdings, Inc. (LNTH) : Free Stock Analysis Report
