On Wednesday, Piper Sandler adjusted its outlook on Optinose (NASDAQ:OPTN) shares, lowering the price target to $1 from the previous $3, while sustaining an Overweight rating on the stock. The adjustment follows Optinose's third-quarter financial report, which revealed earnings per share (EPS) of $0.00 and revenue of $20.4 million. These figures fell short of analysts' expectations, which had forecasted an EPS loss of $0.05 and higher revenue of $23.0 million.
Optinose also revised its sales forecast for Xhance, its nasal spray treatment, reducing the 2024 guidance to a range of $75 million to $79 million. This is a decrease from the prior forecast of $85 million to $90 million and suggests a year-over-year growth of 8% at the midpoint. The company had expanded Xhance's label to include chronic sinusitis in March 2024, but the reduced sales guidance indicates growth is not meeting initial expectations.
Despite the lowered sales outlook, Optinose's management highlighted a positive trend in the acquisition of new prescribers for Xhance during the third quarter of 2024. Piper Sandler's analysis suggests that a strategic exit could be a beneficial move for Optinose, considering the company's enterprise value of approximately $60 million and a market capitalization around $105 million. The firm highlighted the drug's unique delivery system and durable exclusivity as key assets.
The revised price target of $1 is based on tempered sales estimates for Xhance. Piper Sandler applied a 20x price-to-earnings multiple on its 2026 earnings estimate for Optinose, which was then discounted by 15%. Despite the reduction in the price target, the Overweight rating was reiterated, reflecting the firm's continued confidence in the stock's potential.
In other recent news, OptiNose , a specialty pharmaceutical company, reported a modest 3% year-over-year increase in Q3 2024 net revenue for its flagship product, XHANCE, amounting to $20.4 million. However, the company adjusted its full-year 2024 revenue guidance for XHANCE to $75 million to $79 million, marking a decrease from the initial $85 million to $90 million. OptiNose's leadership, including CEO Dr. Ramy Mahmoud and new CFO Terry Kohler, underscored the potential of XHANCE, suggesting that peak annual net revenue could surpass $300 million.
In addition to these financial updates, OptiNose is experiencing an uptick in targeted healthcare providers and has secured a position in Express Scripts' national formularies. The company also confirmed its financial stability, with sufficient funds to support operations for at least the next year. Despite a lower than expected net revenue for Q3 and a revised full-year revenue guidance, OptiNose remains optimistic about new prescription growth and plans to enhance insurance coverage and fulfillment processes.
Lastly, the pharmaceutical company is actively exploring primary care partnerships to reach a larger patient base. While these are recent developments, they reflect OptiNose's ongoing commitment to capitalizing on the momentum around XHANCE and its role in treating chronic sinusitis.
InvestingPro Insights
Recent InvestingPro data provides additional context to Optinose's financial situation and market performance. The company's market capitalization stands at $83.53 million, reflecting the market's current valuation of the firm. Optinose's revenue for the last twelve months as of Q2 2024 was $75.06 million, with a modest revenue growth of 3.91% over the same period.
One of the bright spots in Optinose's financials is its impressive gross profit margin of 89.92% for the last twelve months, which aligns with an InvestingPro Tip highlighting the company's "impressive gross profit margins." This suggests that despite challenges in sales growth, Optinose maintains strong profitability on its products.
However, the company faces significant headwinds. An InvestingPro Tip notes that Optinose is "quickly burning through cash," which is concerning given the reduced sales forecast for Xhance. Additionally, the stock has "taken a big hit over the last week," with a 15.49% decline, and has fallen 37.15% over the past three months. This price action correlates with the company's lowered guidance and the recent analyst price target cut.
For investors considering Optinose, it's worth noting that InvestingPro offers 11 additional tips that could provide further insights into the company's financial health and market position. These additional tips could be particularly valuable given the current volatility in Optinose's stock price and the challenges facing the company.
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