On Tuesday, Citi reaffirmed its Buy rating and $48.00 stock price target for Harmony Biosciences Holdings Inc. (NASDAQ: NASDAQ:HRMY), following the FDA's rejection of a petition filed by Scorpion Capital. The regulatory body's recent decision supports the efficacy and safety of Harmony's drug Wakix, used for treating excessive daytime sleepiness (EDS) and narcolepsy.
The FDA's denial of the citizen petition, which questioned Wakix's approval, comes on the heels of the agency's green light for the drug's use in pediatric patients with narcolepsy, announced on Monday. This approval extends the treatment's availability to children as young as six years old.
Harmony Biosciences' position is further strengthened by the FDA's actions, which align with the findings from Citi's discussions with sleep specialists. These healthcare professionals reportedly express confidence in prescribing Wakix to the majority of their narcolepsy patients, who are typically young and healthy.
Concerns regarding QT prolongation—a measure of heart rhythm—were deemed comparable to other drug classes, with caution advised only for patients with existing heart conditions.
The analyst from Citi also noted that most investors have likely moved beyond the concerns raised by the short seller's report. Tuesday's update from the FDA is expected to dispel any remaining doubts about the drug's safety profile, clearing any residual uncertainty affecting the company's stock.
InvestingPro Insights
In light of the recent FDA endorsement and Citi's reaffirmation of Harmony Biosciences (NASDAQ: HRMY), current market data from InvestingPro underscores the company’s financial health and growth prospects.
With a market capitalization of $1.71 billion and a robust revenue growth of 30.92% over the last twelve months as of Q1 2024, Harmony Biosciences presents a compelling picture of its market position. The company's strong gross profit margin of 79.28% suggests efficient management and a solid foundation for future profitability.
InvestingPro Tips highlight that Harmony Biosciences not only holds more cash than debt on its balance sheet, but also that cash flows can sufficiently cover interest payments, providing a measure of financial stability.
Moreover, the company's management has been actively buying back shares, a sign of confidence in the company's valuation and future prospects. For more in-depth analysis and additional tips, including the fact that analysts predict the company will be profitable this year, visit InvestingPro. You can access these and 6 more InvestingPro Tips with an additional 10% off a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24.
With a P/E ratio adjusted for the last twelve months as of Q1 2024 at 11.69, and a price target from analysts at $46, compared to the previous close price of $30.1, the stock may have significant upside potential. The InvestingPro Fair Value estimate stands at $39.38, suggesting that the stock is undervalued at its current level. As Harmony Biosciences continues to navigate the market and regulatory landscape, these metrics and insights can be valuable to investors considering the company's stock.
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