FDA Approval Confirms Eurand's Long-Term Growth Potential

| About: Eurand N.V. (EURX)

A comment from Kenneth regarding Eurand (NASDAQ:EURX):

Thanks so much for taking the time to reply our many queries. I was wondering if you see any upside potential in Eurand (EURX). The company recently received FDA approval for Zenpep, the only FDA-approved pancreatic enzyme product.



VFC's Take: To answer Kenneth's question, I do think that Eurand has some upside - especially if Friday's after-hours drop into the mid-$11 range is a precursor to this week's trading action.

The FDA's recent approval of Eurand's pancreatic enzyme product - which the company plans to have on the market in the fourth quarter of 2009 - cements EURX as a long term growth stock, in my opinion. The company has a late-stage pipeline and already increasing revenues from other products will now be combined with revenue from Zenpep - for which the company has announced it will 'go it alone' regarding marketing and sales. Eurand is also looking for approvals and partnerships for it's products in various countries around the world.

With 75% of shares held by institutions, the stock should be somewhat stable - although sometimes I think that having that much institutional ownership can limit the upside of a stock because it reduces the amount of 'traded shares,' hence the average traded volume of 45,000 for a company with a market cap of over 600 million.

Additionally, if one (or more) of those institutions start dumping shares for whatever reason, then the flood of shares onto the market (with the minuscule volume) could significantly drop the price of the stock. That said - as long as the products keep producing revenue and the FDA (or foreign) approvals keep rolling in, I don't see a reason why institutions would dump.

I look for EURX to approach a market cap of one billion within the next three or four quarters - just my opinion - which would translate to a stock price of roughly $22. So yes, I do see some upside potential with this stock.

Disclosure: No positions.