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On Thursday, Lake Street Capital Markets adjusted its stance on Optinose (NASDAQ:OPTN), shifting the rating from Buy to Hold and revising the price target downward to $9.00 from the previous $17.00. This change comes in light of recent developments involving Optinose’s transaction with Paratek Pharmaceuticals (NASDAQ:PRTK). According to InvestingPro data, the stock has seen a significant 77% decline over the past year, though it has shown recent strength with an 12% gain in the last week.
Lake Street’s analyst cited the sustainability challenges of a single product company as a key factor influencing the downgrade. Despite maintaining impressive gross profit margins of 90%, InvestingPro analysis reveals the company is quickly burning through cash, with short-term obligations exceeding liquid assets. Optinose CEO Ramy Mahmoud has acknowledged that a company focused on one product does not have long-term viability. The sale of XHANCE, Optinose’s product, to Paratek is seen as a strategic move to place the product with a commercial team that specializes in primary care.
The downgrade also reflects the stock’s performance following the third-quarter 2024 report, which saw a significant decline. With a current market capitalization of $94.22 million and revenue of $75.67 million in the last twelve months, the resulting sale price to Paratek was influenced by this downturn, with the base deal valued at approximately $212 million. This amount represents around 2.0 times the 2025 consensus revenue estimate, a figure that falls short of the 3.4 times multiple seen in comparable companies. For deeper insights into Optinose’s valuation metrics and comprehensive financial analysis, investors can access the detailed Pro Research Report available on InvestingPro.
The revised price target of $9.00 is based on the announced upfront cash payment per share from the acquisition deal with Paratek Pharmaceuticals. Additionally, the potential for Optinose shareholders to receive up to an additional $5 per share through contingent value rights (CVRs) was not factored into Lake Street’s new price target. The analyst’s comments suggest that the transaction with Paratek was a necessary step for Optinose to either be sold or to acquire another asset, thereby avoiding the pitfalls of remaining a single product company. Based on current market conditions and comprehensive analysis from InvestingPro, the stock appears to be trading above its Fair Value, with additional financial health indicators and eight more ProTips available to subscribers.
In other recent news, Paratek Pharmaceuticals has announced a definitive agreement to acquire Optinose, Inc. for up to $330 million. This acquisition aims to expand Paratek’s portfolio by including XHANCE, a drug-device combination product for treating chronic rhinosinusitis. The transaction, pending regulatory clearances and shareholder approval, is expected to close by mid-2025. In financial developments, Optinose reported preliminary unaudited net product revenue of $22.4 million for XHANCE in the fourth quarter of 2024, reflecting a 20% sequential growth in prescriptions. These figures are subject to change upon completion of financial closing procedures and independent audit reviews. Additionally, H.C. Wainwright analyst Matthew Caufield raised the price target for Optinose to $18.00, following a 1-for-15 reverse stock split. This reverse stock split was implemented to comply with Nasdaq’s minimum bid price requirements, reducing the number of outstanding shares significantly. Optinose’s common stock continues to trade on the Nasdaq Global Select Market under the existing ticker symbol with a new CUSIP number.
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