Analysts Even More Bullish on ViroPharma

Dec. 4.08 | About: Shire PLC (SHPG)

ViroPharma Inc. (VPHM) is seeing record sales of its big drug Vancocin which is adding to its already sizable cash hoard. Sales are expected to grow 159.26%. VPHM is an attractive value stock. ViroPharma is trading with a price-to-book of 1.44.

Company Description

ViroPharma is a biopharmaceutical company that addresses serious diseases with a focus on products for physician specialists that support patients with diseases caused by CMV, C. difficile, and hereditary angioedema.

The company's lead clinical compound is maribavir, an orally-administered antiviral Phase 3 drug in development for prevention of cytomegalovirus [CMV] disease in transplant patients.

Vancocin and Cinryze are ViroPharma's big commercial drugs. Vancocin is an antibiotic that treats bacterial infections of the lower digestive tract. Cinryze is administered for routine prophylaxis against angioedema attacks in adolescent and adult patients with hereditary angioedema.

ViroPharma continues to expand. The company completed the acquisition of Lev Pharmaceuticals, a biopharmaceutical company which focused on the treatment of inflammatory diseases, on Oct 21. The company used $385 million in cash to fund the acquisition.

The agreement provided for the conversion of each share of Lev common stock into up front consideration of $442.9 million , or $2.75 per Lev share, comprised of $2.25 per share in cash and 50 cents per share in ViroPharma common stock. ViroPharma will issue approximately 7,359,667 shares under the agreement.

ViroPharma Beat Third Quarter Estimates by 43.48%

On Oct 29, ViroPharma reported third-quarter earnings that saw record sales of Vancocin. Sales surged 29.4% to $65.9 million compared to $50.9 million in the third quarter of 2007. 9-month sales were $182.3 million, up from $156.1 million in the first nine months of 2007.

Increased demand and a price increase in 2008 drove sales of Vancocin.

Net income grew 27.23% to $27.1 million, or 33 cents per share, from $21.3 million, or 26 cents, in the year ago period.

ViroPharma has plenty of cash. As of Sep 30, the company's working capital stood at $671.8 million, with an increase of $27.8 million in the third quarter fueled by sales of Vancocin.

Consensus Estimates Rise for 2008

Covering analysts have been bullish about 2008 as consensus estimates have jumped 8 cents to 98 cents in the last 60 days. 2009 estimates are also higher, up 14 cents to 71 cents in the prior 2 months.

Zacks analyst Jason Napodano discussed ViroPharma in the Bull of the Day on Dec 3.

He said:

ViroPharma Inc.'s business fundamentals are strong. Sales and earnings are outpacing expectations and the company should exit the year with over $300 million in cash on hand. We are maintaining our Buy rating with a price target of $16.

Value Fundamentals

ViroPharma is a Zacks #1 Rank (Strong Buy) stock. It has surprised on estimates 3 out of the last 4 quarters by an average of 19.88%.

VPHM is trading with a P/E of only 11.6x forward earnings. Its price-to-book is 1.44. The company has a 1-year return on equity [ROE] of 17.14%.