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Jazz Pharma Attains 52-Week High - Analyst Blog

Posted
11/20/2013 11:08:00 AM
By: Zacks.com
Referenced Stocks:ALIOF;JAZZ;LCI;SHPG

Shares of Jazz Pharmaceuticals ( JAZZ ) reached a 52-week high of $111.32 during the course of the trading session on Nov 19, 2013. The closing price of $110.00 of the company reflects a robust year-to-date return of 101.5%.

The specialty biopharmaceutical Zacks #1 Rank (Strong Buy) company has a market cap of $6.3 billion. Average volume of shares traded during the trading session stood at 762,911.

The Growth Story

Shares of the company started escalating following the release of its impressive third quarter 2013 results.

Jazz Pharma reported third quarter 2013 results on Nov 5. Adjusted earnings of $1.66 per share were well above the Zacks Consensus Estimate of $1.52 and the year-ago adjusted earnings of $1.22 per share. Including stock-based compensation expense and depreciation, earnings were $1.61 per share.

Performance of the company's key growth drivers, Xyrem (narcolepsy) and Erwinaze (oncology), were promising in the third quarter of 2013. While Xyrem sales increased 50% to $153.7 million, Erwinaze generated revenues of $44.1 million, up 39% year over year.

Both products are witnessing strong demand, which is expected to boost revenues. Xyrem net sales in 2013 are expected in the range of $565-$570 million as compared to $378.7 million in 2012. In 2013 Erwinaze net sales are expected in the range of $173-$178 million compared with $72.1 million in the prior year.

Based on its progress, the company raised the low end of its earnings per share projection to $6.30 to $6.40 per share (previous guidance: $6.20 to $6.40). Jazz Pharma tweaked its revenue guidance to $867-$877 million from $860-$880 million expected earlier.

On a price-to-sales basis, Jazz Pharma is trading at 8.2x, reflecting a huge premium of 134.3% compared with the peer group average of 3.5x. On a price-to-book basis, the stock is also trading at a premium to the peer group average. Given the company's strong fundamentals, the premium valuation is justified.

The Zacks Consensus Estimate for 2013 increased 10 cents to $5.77 per share over the last 30 days on the back of positive estimate revisions. For 2014, estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 43 cents to $7.78 per share.

Shire ( SHPG ), Lannett Company, Inc. ( LCI ) and Actelion Ltd. ( ALIOF ) too carry Zacks #1 Rank.



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