Jazz Pharmaceuticals' Neuroscience Pipeline Readouts In Focus: Analyst Lowers Price Target

Cantor Fitzgerald analyst Charles C. Duncan reiterated the Overweight rating on Jazz Pharmaceuticals Plc JAZZ, lowering the price target to $180 from $210.

The analyst lowered the target price based on a new valuation methodology, which includes a higher cost of capital assumption given the current rate environment. 

Duncan also cautions about risk perception in two near-term neuroscience pipeline readouts (JZP150 P2 in PTSD by FY23 and suvecaltamide P2b in essential tremor in 1H24 (both guided).

The analyst sharply lowered the FY23 EPS estimate from $16.96 to $$6.86. For FY24, Duncan slashed the EPS estimates from $18.48 to $8.18. 

On the positive side, Jazz recently reported 2Q23 total revenues of $957.3 million, which came in above the FactSet consensus estimate of $942 million.

Duncan is cheerful on Jazz's progress this quarter, highlighted by good execution across its commercial portfolio, with all three vital growth-driving products achieving YoY double-digit growth.

Considering the sodium oxybate franchise, JAZZ's Xywav is the only FDA-approved treatment for idiopathic hypersomnia. The analyst highlights Xywav's strong adoption in narcolepsy, underscored by the FDA acknowledging that the variance in sodium content between Xywav and fixed-dose high-sodium oxybate holds significant clinical relevance for all narcolepsy patients.

Additionally, the global launch of Epidiolex continues to gain momentum, pointing to it having blockbuster potential, the analyst views. 

The analyst adds that Epidiolex's global prescriber base is increasing, with multiple launches expected outside of the U.S. this year.

As the drug is approved in the U.S. and elsewhere for these indications, Jazz is currently enrolling a pivotal P3 trial of Epidiolex for Dravet syndrome (DS), Lennox-Gastaut syndrome (LGS), and tuberous sclerosis complex (TSC) in Japan as well.

Given the above, the analyst raised FY23 revenue estimates from $3.697 billion to $3.847 billion.

Price Action: JAZZ shares are trading higher by 0.50% to $140.04 on the last check Monday.