On Friday, Piper Sandler affirmed its Overweight rating on Supernus Pharmaceuticals (NASDAQ: NASDAQ:SUPN), with a steady price target of $41.00. The firm's analysis followed Supernus' release of interim data from its Phase IIa study for SPN-817, an oral synthetic form of acetylcholinesterase inhibitor huperzine A, aimed at treating focal onset seizures.
Supernus Pharmaceuticals shared promising interim results from an open-label Phase IIa study of SPN-817, which is designed to reduce seizure frequency. According to the firm, the medication's performance appears competitive when compared to other anti-seizure medications currently on the market, despite the lack of a placebo control in the study. While adverse events were reported, none were considered severe enough to raise significant concerns.
The firm's position reflects a belief in the underappreciation of SPN-817 and other pipeline assets, such as SPN-820 for treatment-resistant depression, in Supernus' current market valuation. With an enterprise value to estimated 2025 EBITDA ratio of approximately 7 times, Piper Sandler suggests that the market is not fully recognizing the potential of these assets.
Piper Sandler also cited strong prospects for growth in Supernus' core business, highlighting products like Qelbree for ADHD and Gocovri for dyskinesia in Parkinson's disease. The firm anticipates considerable long-term EBITDA growth from these products, especially as the company moves past the expected 2024 trough year, which will see the loss of exclusivity for two of its other drugs, Trokendi XR and Oxtellar XR.
InvestingPro Insights
In light of Piper Sandler's Overweight rating on Supernus Pharmaceuticals (NASDAQ: SUPN), current InvestingPro data and insights offer additional context for investors. Supernus holds a significant cash position relative to its debt, signaling financial stability, which is a positive sign for investors. This is reflected in the company's market capitalization of $1.53 billion. Additionally, with a gross profit margin of 87.17% for the last twelve months as of Q1 2024, Supernus showcases its ability to maintain high profitability on its products.
Despite a recent decline in revenue growth, analysts are optimistic about the company's future, predicting net income growth this year. This aligns with the potential value from its developmental pipeline highlighted by Piper Sandler. However, investors should note that the company does not pay dividends, which may influence investment decisions for those seeking regular income. Supernus is currently trading at a high EBIT valuation multiple, which could suggest it is priced optimistically relative to its earnings before interest and taxes.
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