Stocks

Amarin Stock Has Soared. Why Citi Thinks It's Gone Far Enough.

Citi Research downgraded Amarin stock, after positive news for its heart drug Vascepa sent it soaring. Citi says Vascepa’s promise is now priced in.

Citi downgraded the stock after a blockbuster week that brought positive news for the biotech’s heart drug, Amarin.

After the biotech firm Amarin’s blockbuster week last week, in which the stock jumped 37% on news around the company’s cardiovascular drug Vascepa, analysts at Citi Research are downgrading the firm. They believe the medication’s promise is now priced in.

Citi Research analyst Joel Beatty downgraded Amarin to Neutral/High Risk from Buy/High Risk. He increased his price target on the stock to $27 from $23. Shares of Amarin (ticker: AMRN) closed Friday at $24.02.

“We believe Vascepa is an effective drug and anticipate sales accelerating significantly over the next year, however, we believe this is now already priced into the stock,” Beatty wrote.

The stock jump also reflects an expectation that the company could be acquired, he wrote.

Amarin didn’t immediately respond to a request for comment about the downgrade.

The back story. Shares of Amarin have soared 76.5% so far this year. The company sells a fish-based drug called Vascepa that currently is approved by the Food and Drug Administration to reduce triglyceride levels in certain patients. Last week, an FDA advisory committee voted unanimously to recommend that the FDA approve Vascepa to reduce the risk of cardiovascular events, including heart attack and stroke. The stock climbed on the news, though questions remain about how broad the label expansion will be.

What’s new. In Beatty’s note on Monday, the analyst wrote that his model assumes $3.2 billion in annual Vascepa sales by 2024, and that the drug “will reach multi-$B in peak sales.”

“We’re now modeling sales of $3.2B in 2024 (up from $2.7B previously), reflecting increased confidence in a label that will allow broad use and cost effectiveness that supports taking modest price increases in future years,” Beatty wrote.

But he said the sales expectations are already factored into the stock price.

“We see sales accelerating substantially over the next 12 months, however, we believe this is already priced into the stock,” Beatty wrote.

Beatty said he rates the company High Risk because of the nature of the biotech sector.

Looking forward. Investors, so far, don’t seem to be heeding Beatty’s warning. Shares of Amarin were up 3.7% in premarket trading on Monday.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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