On Thursday, H.C. Wainwright reaffirmed a Buy rating on United Therapeutics Corp . (NASDAQ:UTHR) and increased the price target to $425 from the previous $400. The firm's analyst cited the company's strategic positioning in anticipation of rising competition in the markets for pulmonary arterial hypertension (PAH) and pulmonary hypertension in patients with interstitial lung disease (PH-ILD).
United Therapeutics has been proactive in securing its market share by initiating contracts with Part D payers, a move not historically typical for the company's product Tyvaso. Some of these contracts have been in effect since July 1, with additional contracts beginning on October 1, and the final one set to commence on January 1.
The analyst believes that these agreements will advantageously place United Therapeutics when new competitors emerge in the market. The increased price target reflects a positive outlook on Tyvaso's continued strong performance and an adjusted estimated peak penetration rate for PAH, which has been raised from 38% to 45%.
The new price target of $425 is derived from a composite valuation method. This includes a share value of $345.99, based on a 20x multiple of taxed and diluted GAAP EPS of $42.87 for the fiscal year 2034, discounted back to fiscal year 2024 at a rate of 10%. Additionally, it incorporates a net present value (NPV) of $504.64 per share, with a discount rate of 10% and a growth rate of -1.0%.
In other recent news, United Therapeutics Corporation reported a significant growth in its third-quarter revenue for 2024, reaching $749 million, a 23% increase from the same period last year. This growth was largely driven by the company's key products: Tyvaso, Orenitram, and Unituxin. The company also completed a $1 billion accelerated share repurchase program.
These recent developments reflect United Therapeutics' strategic focus on expanding commercial ventures and research and development. The company is eyeing upcoming clinical milestones, including the TETON 2 study results, and is awaiting a potential FDA decision on its Centralized Lung Evaluation System in 2025.
Despite a slight decrease in worldwide revenue for Remodulin, the company is confident in its long-term viability as a preferred treatment for PAH. The company aims to reach a revenue of $4 billion to $6 billion by leveraging its product portfolio and upcoming offerings.
InvestingPro Insights
United Therapeutics Corp. (NASDAQ:UTHR) continues to demonstrate strong financial performance, aligning with H.C. Wainwright's optimistic outlook. According to InvestingPro data, the company boasts an impressive gross profit margin of 88.85% for the last twelve months as of Q2 2024, reflecting its operational efficiency. This high margin supports the analyst's positive view on Tyvaso's performance and potential market penetration.
InvestingPro Tips highlight that United Therapeutics holds more cash than debt on its balance sheet, indicating a solid financial position to support its strategic initiatives in the competitive PAH and PH-ILD markets. Additionally, the company's P/E ratio of 15.53 suggests it may be undervalued relative to its near-term earnings growth potential, which could justify the increased price target.
The company's proactive approach to securing market share is further supported by its strong recent performance, with a 54.23% price total return over the past six months. This aligns with the InvestingPro Tip noting a large price uptick over the last six months.
For investors seeking more comprehensive insights, InvestingPro offers 15 additional tips for United Therapeutics, providing a deeper understanding of the company's financial health and market position.
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