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Summary

  • Pacira Pharmaceuticals reported earnings and revenue that blew past analyst estimates.
  • Exparel commercialization exceeds expectations as product sales more than doubled to $44.9 million in Q2 and averaging 28 new accounts per week.
  • I am raising my price target to reflect the higher future growth potential.

Pacira Pharmaceuticals (NASDAQ:PCRX) reported earnings and revenue that were well above consensus estimates. The company reported second quarter non-GAAP EPS of $0.04 compared to expectations for a $0.21 loss. Revenue was up 31% sequentially to $47.2 million and up 174.5% over Q2 2013.

Exparel commercialization continues to trounce expectations. Exparel net product sales were $44.9 million in Q2 compared to $15.2 million in Q2 2013. There were 363 new accounts ordering Exparel in Q2 with 28 new accounts on average per week, while the average number of new accounts in Q1 was 27 per week. Overall, it was a great quarter as the company continues to execute its growth strategy. Another long-term growth catalyst is likely coming on March 5, 2015, which is the PDUFA date for the Exparel nerve block indication, which should expand the potential addressable market for the drug.

The second quarter report further strengthens my long thesis for Pacira and I am raising my price target to $145 which translates into approximately 60% upside from the current price. Forward estimates are likely to go up substantially from here and the new price target reflects the higher expected growth for the rest of the year. I also believe that the long-term growth potential is north of 100%, as the high valuation is most likely to be preserved in the next couple of quarters given the growth prospects and implications from other examples of high growth stocks in the sector (see my previous article on Pacira). The company is still lightly followed by Wall Street and new initiations and raised price targets and EPS and revenue estimates should serve as catalysts for the share price in the next couple of weeks. The biggest risk for the long thesis at the moment is the poor general market environment and the weakness in the biotech sector. But the potential pressure is short-term in nature and has no impact on Pacira's long-term investment thesis.

Disclosure: The author is long PCRX. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Source: Update: Pacira Delivers Q2 Earnings Above Expectations