BTIG sets Ardelyx stock Buy rating, $14 price target

On Tuesday, BTIG initiated coverage on Ardelyx, Inc. (NASDAQ:ARDX) with a Buy rating and a price target of $14.00, sighting the recent decline in the company’s shares following its earnings report as a favorable opportunity for investors. According to InvestingPro data, analysts maintain a strong buy consensus with price targets ranging from $5.50 to $15.00, and the stock appears undervalued based on InvestingPro’s Fair Value analysis. Analysts at BTIG noted that Ardelyx’s products, Ibsrela and Xphozah, are gaining traction in markets with substantial sales potential and lack second-line competition, which they believe will pave the way for the company’s return to profitability.

Ibsrela, addressing the $4 billion irritable bowel syndrome with constipation (IBS-C) market in the United States, has shown robust growth, with a 21% increase in total prescription volume from 2020 to 2024. The company’s fourth-quarter results demonstrated a 32% quarter-over-quarter revenue increase for Ibsrela, reaching a $215 million run-rate, which suggests that management’s fiscal year 2025 revenue forecast of $240 million to $250 million may be conservative. InvestingPro data reveals impressive revenue growth of 168% in the last twelve months, with total revenue reaching $333.6 million.

Ardelyx’s focus has shifted toward the non-Medicare segment of the hyperphosphatemia in chronic kidney disease (CKD) market, which is estimated to include over 150,000 patients in the U.S. The firm also highlighted Ardelyx’s current no-rebate policy with payors as a potential avenue for accelerating product uptake in the future. InvestingPro analysis shows the company maintains a strong financial position with a current ratio of 4.58, indicating ample liquidity to support its growth initiatives.

BTIG analysts pointed out that the fourth quarter of 2024 marked Ardelyx’s first quarter of product-driven profitability and anticipate minimal cash impact from operations through the fiscal year 2025. With Ardelyx trading at 2.2 times its estimated 2026 sales value, BTIG sees a considerable upside potential for the stock, especially considering that recent independent commercial launches average a multiple of 5.4 times. For deeper insights into Ardelyx’s valuation and growth potential, InvestingPro subscribers can access comprehensive financial health scores and additional ProTips in the detailed Pro Research Report.

Furthermore, BTIG suggests that the rights to Ibsrela and Xphozah in Europe could represent additional value for Ardelyx, which is not yet reflected in its current stock price. The firm’s initiation at a Buy rating with a $14 price target reflects their confidence in the company’s growth prospects and market positioning.

In other recent news, Ardelyx reported its fourth-quarter 2024 earnings, surpassing market expectations with an earnings per share (EPS) of $0.02, against the forecasted $0.01. The company also exceeded revenue forecasts, posting $116.1 million compared to an expected $108.58 million. Ardelyx’s product, XPHOZAH, achieved fourth-quarter sales of $57.2 million, marking an 11.1% increase from the previous quarter. Despite these positive results, H.C. Wainwright maintained a Neutral rating on Ardelyx, with a price target of $5.50, reflecting cautious optimism about the company’s future amid changes in Medicare coverage.

Additionally, Ardelyx received approval from China’s Center for Drug Evaluation for its kidney disease drug, tenapanor, known as Wan Ti Le in China. This approval triggers a $5 million milestone payment from its partner, Shanghai Fosun Pharmaceutical (TADAWUL:2070) Industrial Development Co. Ltd. The company faces challenges ahead, particularly with the exclusion of XPHOZAH from Medicare Part D starting January 1, 2025, which could impact future sales.

Ardelyx’s strategic focus on expanding its sales force and enhancing communication has contributed to its robust quarterly results. The company aims for XPHOZAH to reach $750 million in annual U.S. net sales revenue before its patent expires in 2034. Despite the positive earnings report, the company is navigating significant changes in the market landscape, particularly due to the Medicare Part D exclusion.

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