Stock market today: S&P 500 climbs as health care, tech gain; Nvidia earnings loom
On Tuesday, Raymond (NSE:RYMD) James analyst Gary Nachman maintained a Market Perform rating on Pacira Pharmaceuticals (NASDAQ:PCRX), a company currently trading at $22.91 with a market cap of $1.06 billion. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment, following the company's announcement of a settlement with Fresenius/Jiangsu/eVenus regarding a generic version of Exparel. The agreement permits Fresenius to start selling limited quantities of the drug in 2030, with the volume allowed to increase until 2038, and no volume restrictions starting in 2039.
The settlement is seen as a positive development for Pacira, providing a clear path for the company's main product, Exparel. It also alleviates concerns about the potential immediate introduction of a generic competitor. Supporting this optimism, InvestingPro data shows the company has maintained a solid 11% revenue CAGR over the past five years, with analysts forecasting 7% revenue growth for the upcoming year. Two analysts have recently revised their earnings estimates upward, reinforcing Pacira's confidence in continuing revenue growth at a double-digit compound annual growth rate until the decade's end. The settlement, while somewhat expected, is welcomed as it confirms the company's outlook.
The terms of the agreement indicate a managed entry of the generic drug, with a high single-digit percentage impact anticipated in 2030, and more significant erosion expected between 2033 and 2038. This arrangement gives Pacira time to expand Exparel's market presence, with additional support from the NOPAIN Act, and to pursue its strategic 5x30 plan, which aims to grow the company significantly by the end of the decade.
Despite the settlement providing Pacira with the necessary time to focus on its business objectives, Raymond James notes that the company's long-term revenue targets are ambitious. The analyst believes that Pacira's management has considerable work ahead to enhance its product pipeline, particularly as patents for other treatments, such as Zilretta and iovera, are set to expire in the future.
The settlement marks a strategic milestone for Pacira, allowing the company to concentrate on business execution without the immediate threat of generic competition for Exparel. The company maintains strong financial health with a current ratio of 2.4 and operates with moderate debt levels. Raymond James' decision to maintain the Market Perform rating reflects a cautious but acknowledging view of Pacira's recent actions and future prospects. For deeper insights into Pacira's financial health and growth potential, investors can access comprehensive analysis and additional ProTips through InvestingPro's detailed research reports.
In other recent news, Pacira BioSciences, Inc. has announced a significant development in its ongoing patent litigation. The company reached a settlement with Fresenius Kabi USA and others regarding its product, EXPAREL, effectively securing its market exclusivity until at least 2030. This agreement allows Fresenius Kabi to sell limited volumes of a generic version starting in the early 2030s, with no volume restrictions beginning in 2039. Meanwhile, Pacira has also launched a Phase 2 study for its gene therapy candidate, PCRX-201, aimed at treating osteoarthritis of the knee. The study will evaluate the safety and efficacy of the therapy, with initial results expected by the end of 2026.
Additionally, Pacira has adopted a majority voting standard for director elections, enhancing its corporate governance practices. This change requires directors in uncontested elections to receive more votes in favor than against to be elected. The company is also evaluating board nominees from DOMA Perpetual Capital Management for its 2025 Annual Meeting of Stockholders as part of its strategic "5x30" growth plan. These recent developments reflect Pacira's ongoing efforts to strengthen its market position and enhance shareholder value.
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