A poor take off doesn't always end in a poor landing.
Pacira (PCRX), a leading pharmaceutical company, didn't exactly experience the take-off it expected with the launch of Exparel, a medicine designed to help surgeons in minor surgical operations. Although the company is experiencing pessimistic cash flows due to slow sales throughout, Pacira is determined and expects a good breakthrough in the market for Exparel in the next quarter. It might be too early to say this, but the medicine's potential to be huge has been a longstanding rumor with analysts.
Market analysts believe that the performance of Pacira at NASDAQ is noticeable. Pacira was inducted in NASDAQ in 2011; and soon after its induction, the company launched its 6,000,000 shares at face value of $7.00. Historically, the stock hit the 52-week low at $7.22 and 52-week high at $19.31. The stock price change in this year is a healthy 114.58%.
Pacira's third quarter performance has been adequate. Sales have increased to $4.6 million from $2.3 million in the second quarter. Currently, it has an overall B grading and its stock is trading at about $17, with a bullish trend. The company's press release indicates that most orders were, in fact, for Exparel. The same press release also shows that around 58% of the sales from Exparel were actually re-orders, a welcome sign for the future of the medication.
Still, there is much to be done before the company gets better reviews from market analysts and investors. The current ranking of the company is 7 out of 114 companies in its industry. In fact, one of the market analysts mentioned Pacira as one of the best growing pharmaceutical companies and gave it a green signal for potential growth. However, it faces heavy competition from both emerging and dominant companies such as Novartis (NVS), Acura Pharmaceuticals (ACUR) and Pfizer (PFE). Since Pacira doesn't pay any dividend in a dividend-heavy industry, it risks alienating the casual investor. Aside from the dividend issue, Pacira's high deficits, and Exparel's inability to lure as many consumers as were expected by the end of the third quarter, there's a few other blocks to success.
For one, Pacira has a number of noticeable direct competitors such as Affymax (AFFY), which launched OMONTYS for treating anemia caused by kidney disease. The reported sales of OMONTYS were about $17k in May. Cadence Pharmaceuticals (CADX), which is another rival, launched OFIRMEV, a product with a reported sale of about $40k in the first month. Despite the growing competition, Pacira has been more optimistic and progressive. Exparel is a revolutionizing drug with the ability to minimize pain by directly targeting the nervous system, so it is charming doctors, albeit at a slow rate.
For all the roadblocks though, if Exparel can keep its buyers in close and continue to attract new doctors, it has the potential to buoy Pacira up to the next tier of pharma names and investments.
If you plan on a long-term investment, Pacira is not likely to disappoint your expectations. Pacira's stock has shown an upward trend since its launch. Observant analysts recommend buying. The company has set a price target of $22.
The big question among analysts is whether Exparel has enough juice to fight off the competition and downward trending cash flows alone. A more appropriate query would be to wonder whether Pacira has enough Exparel to do so. According to facts and figures, though, the company has exactly what it needs to compete against rivals and add profit making to its to-do list.
Although Exparel is being referred to as a potential big name for the future, Pacira is not dependent on only it for inflow correction. The company has a few other products up for sales, which include DepoCyte, DepoDur and certain discovery programs. These medications don't have the potential that Exparel has - but it shows a bit of diversification and strengthens the company's outlook so that its bottom line doesn't completely rely on a make-or-break miracle drug.
In my opinion, the future of the company looks promising as it continues to show clear signs of aggressive volatility throughout the fiscal year. Besides, its progress has been warmly greeted by 3 sectors: the producing sector, the consuming sector and the investing sector. For all things considered, Pacira is definitely a good buy.