On Friday, Piper Sandler adjusted its outlook on Avadel Pharmaceuticals (NASDAQ:AVDL), reducing the price target to $13.00 from the previous $24.00 while maintaining an Overweight rating on the company’s stock. Currently trading at $10.69, the stock maintains a strong bullish consensus among analysts, according to InvestingPro data.
The revision follows Avadel’s pre-announcement of flat fourth-quarter sales for its product Lumryz, which included an approximate $6 million inventory headwind. The company also issued sales guidance for 2025, projecting $240 million to $260 million, which is a 50% growth at the midpoint compared to 2024 but falls short of the consensus estimate of approximately $286 million.
Despite the lower-than-expected guidance, Piper Sandler remains optimistic about the future growth of Lumryz. The firm acknowledges the potential challenges that may arise from the entry of orexin 2 receptor (OX2R) agonists later in the decade and into the 2030s, which could impact Avadel’s market share.
InvestingPro data reveals the company maintains impressive gross profit margins of nearly 92%, suggesting strong pricing power. Get access to 7 more key ProTips and comprehensive analysis with an InvestingPro subscription. However, they also note that Lumryz has intellectual property protection extending into 2042, which provides a significant duration for its commercial potential.
The firm’s position is also influenced by the recent performance of Avadel’s shares, which have declined by roughly 24% since the beginning of 2024. With a healthy current ratio of 2.97 and moderate debt levels, the company maintains strong financial flexibility.
In light of the current enterprise value to 2026 estimated EBITDA ratio of approximately 11 times, based on Piper Sandler’s adjusted estimates, the analysts see a pathway for value recovery for the company. Discover detailed financial health metrics and Fair Value analysis with a InvestingPro subscription, including access to the comprehensive Pro Research Report available for over 1,400 US stocks.
Piper Sandler’s statement reflects a belief in the inherent value of Avadel despite the immediate setbacks. "All told, with the shares down ~24% since the beginning of 2024, and now at an EV/2026E EBITDA of ~11x our now tempered estimate, we believe the backdrop we articulated points to value recovery," the firm stated. They reaffirm their confidence in Avadel by reiterating an Overweight rating while adjusting the price target to reflect recent challenges and market conditions.
In other recent news, Avadel Pharmaceuticals reported its Q4 earnings, revealing a significant increase in revenue despite falling short of analyst expectations. The company’s Q4 net product revenue was approximately $50.0 million, lower than the projected $52.7 million. However, this still represents a more than 150% increase compared to the same quarter in the previous year. For the full year of 2024, Avadel’s net product revenue was approximately $169.0 million, a substantial rise from $28.0 million in 2023.
In addition to these financial results, Avadel also disclosed that it ended the quarter with a positive cash flow, with about $73.0 million in cash, cash equivalents, and marketable securities. The company also provided guidance for its product LUMRYZ, projecting a net product revenue of $240 – $260 million in 2025, which would signify a 50% YoY growth at the midpoint.
Further, Avadel reported that as of December 31, 2024, the company had 2,500 patients on LUMRYZ, including 600 patients that initiated therapy in the fourth quarter.
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