BofA maintains Buy on Jazz Pharmaceuticals stock, target at $213

On Friday, BofA Securities expressed continued confidence in Jazz Pharmaceuticals (NASDAQ:JAZZ), maintaining a Buy rating and a price target of $213.00. The firm's analysts addressed concerns about the potential impact of anticipated pharmaceutical tariffs on the company's stock performance. Currently trading at $102.05 with a P/E ratio of 11.26x, Jazz Pharmaceuticals has experienced a significant decrease in its stock value, dropping approximately 29% since late March, a decline attributed to the market's reaction to possible tariffs on drugs imported from Ireland. According to InvestingPro data, the stock's RSI indicates oversold conditions, suggesting the recent selloff might be overdone.

Jazz's narcolepsy treatment, Xywav, which generates $1.7 billion in revenue, has its intellectual property and manufacturing based in Ireland. Despite the tariff concerns, Jazz has indicated it could mitigate short-term effects by utilizing its existing U.S. inventory, which has a long shelf-life. The company's strong financial position, with an impressive 92.36% gross profit margin and robust current ratio of 4.46x, provides flexibility in managing potential manufacturing transitions. Additionally, the company has confirmed that its third-party Contract Manufacturing Organization (CMO) is located in the United States and already produces Xywav, eliminating the need for FDA or DEA site approvals.

The analysis by BofA Securities highlighted the uncertainties regarding the potential increase in production at the third-party site, considering Xywav's status as a DEA-scheduled substance. However, they noted that capacity constraints seem unlikely for a low-volume drug treating fewer than 20,000 patients. If tariffs are imposed at a significant level, BofA suggests it would be logical for Jazz to shift production to its U.S. CMO and build up inventory to avoid tariffs, as these products would not pass through customs.

The firm anticipates that more details about Jazz's U.S. production capabilities will be revealed during the company's first-quarter earnings call, scheduled for April 30. InvestingPro analysis suggests the stock is currently undervalued, with analyst targets ranging from $150 to $230. BofA Securities' stance reflects a belief that the market has overreacted to the tariff risks and that Jazz's valuation is currently undemanding. They also point to the potential upside from the company's Phase 3 zani program as a catalyst for the stock. Discover more insights and 12 additional ProTips for JAZZ with an InvestingPro subscription, including detailed analysis of the company's financial health and growth prospects.

In other recent news, Jazz Pharmaceuticals has been in the spotlight with several financial and strategic updates. The company recently reported its 2025 guidance, highlighting significant R&D savings and potential operating margin improvements, which led H.C. Wainwright to raise its price target to $217 and maintain a Buy rating. Meanwhile, UBS adjusted its price target for Jazz Pharmaceuticals to $166, citing a reduced price-to-earnings multiple and maintaining a Buy recommendation. The analysts from UBS also noted the company's diverse manufacturing presence and the potential impact of its Irish domicile on taxes and tariffs.

In a strategic move, Jazz Pharmaceuticals announced its acquisition of Chimerix (NASDAQ:CMRX), valued at $935 million, expected to enhance its portfolio with dordaviprone, a promising treatment for a rare brain tumor. This acquisition has influenced Truist Securities to increase its price target to $230, factoring in the drug's potential market impact. Additionally, RBC Capital Markets slightly lowered its price target to $178, maintaining an Outperform rating, while acknowledging the company's strong commercial franchises and the resilience of its cannabis-derived drug, Epidiolex.

Jazz Pharmaceuticals' ongoing developments, including the anticipated launch of dordaviprone and the progression of its Ziihera pipeline, have been closely monitored by investors. The company's strategic acquisitions and financial performance continue to shape analysts' outlooks, with a focus on upcoming earnings and product launches. As these updates unfold, the market remains attentive to Jazz Pharmaceuticals' operational strategies and financial health.

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