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On Wednesday, Guggenheim maintained a Buy rating on Tarsus Pharmaceuticals (NASDAQ:TARS) and increased the price target to $78 from the previous $75, following the company’s solid fourth-quarter performance. Tarsus Pharmaceuticals reported Xdemvy sales of $66.4 million, surpassing both Guggenheim’s and the Street’s expectations due to robust demand in the fourth quarter, contributing to a full-year total of $180 million in sales. According to InvestingPro data, the company achieved an impressive revenue growth of 948% and maintains a strong gross profit margin of 93%. The company revealed that 58,500 bottles of Xdemvy were dispensed, which exceeded their earlier guidance range of 50,000 to 55,000 bottles. This figure is notably higher than the transaction records (TRx) of approximately 64,000 bottles, which the company attributes to an 11% overestimation by IQVIA.
Despite anticipating a seasonal decline in gross-to-net (GTN) revenue in the first quarter, Tarsus Pharmaceuticals expects a discount range of 46-49% and is guiding for 62,000 to 67,000 bottles dispensed. The company’s optimism is fueled by the initial success of the expanded sales force and increased payer coverage implemented towards the end of 2024. InvestingPro analysis shows the company maintains a healthy financial position with a current ratio of 4.42, indicating strong ability to meet short-term obligations. Subscribers can access 10+ additional ProTips and detailed financial metrics in the comprehensive Pro Research Report. Tarsus anticipates that its growing direct-to-consumer (DTC) campaign and the dissemination of data on Meibomian Gland Dysfunction (MGD) will be key drivers of growth in 2025.
The analyst from Guggenheim highlighted the positive impact of the DTC campaign, which has led the company to increase its spending to broaden its reach further. In response to these developments, Guggenheim has updated its financial model, raising its revenue forecasts for 2025 and beyond based on strong leading indicators and the company’s confident outlook.
Despite what Guggenheim perceives as strong results and a solid forecast, the stock experienced a negative reaction, which the analyst found puzzling. The stock has declined 16.7% over the past week, with InvestingPro data indicating the stock is currently in oversold territory. Emphasizing the robust performance and promising guidance, Guggenheim reiterated its Buy rating and adjusted the price target upward, signaling confidence in Tarsus Pharmaceuticals’ future prospects. With analyst targets ranging from $44 to $84, investors can access detailed valuation metrics and Fair Value analysis through InvestingPro’s comprehensive research tools.
In other recent news, Tarsus Pharmaceuticals reported its fourth-quarter 2024 earnings, showcasing a strong performance by exceeding revenue expectations. The company achieved $66.4 million in revenue, surpassing the forecasted $57.53 million, and reported an earnings per share (EPS) of -$0.60, which was better than the anticipated -$0.77. Tarsus Pharmaceuticals also noted that its expanded sales force and direct-to-consumer campaigns contributed significantly to this growth. Analysts at H.C. Wainwright maintained a Buy rating with a $73 price target for Tarsus, emphasizing the company’s long-term growth potential and revenue projections. They increased their revenue forecasts for Tarsus’ product XDEMVY by 5% for 2025 and 3-5% for subsequent years, expressing confidence in the company’s market prospects. The analysts highlighted that the market may be underestimating Tarsus, particularly regarding the U.S. potential for XDEMVY and additional international revenue opportunities. Tarsus Pharmaceuticals ended the year with a strong cash position of $291.4 million and a gross margin of approximately 93%. The company’s strategic initiatives, including a direct-to-consumer TV campaign, are expected to continue driving market presence and growth in the eye care sector.
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