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On Friday, Scotiabank (TSX:BNS) initiated coverage of Ardelyx, Inc. (NASDAQ:ARDX), assigning a Sector Outperform rating and establishing a price target of $15.00 per share. Currently trading at $5.32, the stock has attracted strong analyst support, with a consensus recommendation of 1.4 (Strong Buy). The new coverage is based on the firm’s assessment that the current market concerns regarding the sales potential of Ardelyx’s hyperphosphatemia treatment, Xphozah, are exaggerated. According to Scotiabank, these concerns largely revolve around the belief that Xphozah sales cannot be significant without Medicare Part D coverage.
The analyst at Scotiabank expressed optimism about the biopharmaceutical company’s valuation, emphasizing that Ardelyx’s stock is currently undervalued when considering the prospects of Ibsrela, its treatment for irritable bowel syndrome. This aligns with InvestingPro analysis, which indicates the stock is trading below its Fair Value. With a market capitalization of $1.27 billion and impressive revenue growth of 168% in the last twelve months, this valuation standpoint suggests that the market has not fully appreciated the intrinsic worth of Ardelyx’s offerings.
Scotiabank’s outlook is particularly positive regarding the second half of 2025, where they anticipate a potential increase in Xphozah sales. This projection is a key component of their thesis, which supports the Sector Outperform rating and the $15.00 price target. InvestingPro data reveals the company maintains a strong liquidity position with a current ratio of 4.58 and operates with moderate debt levels, providing financial flexibility to support its growth initiatives.
Ardelyx’s stock performance in the coming months will likely be influenced by the market’s reception to the company’s commercial strategies for both Xphozah and Ibsrela. Scotiabank’s coverage initiation and positive forecast provide a new perspective for investors considering the potential of Ardelyx’s stock.
Investors and market watchers will be keeping a close eye on Ardelyx’s sales figures and market activities, especially in the latter half of 2025, to gauge whether the anticipated sales uptick for Xphozah materializes as Scotiabank predicts.
In other recent news, Ardelyx, Inc. reported its fourth-quarter 2024 earnings, surpassing market expectations with an earnings per share of $0.02, doubling the forecasted $0.01. The company also exceeded revenue forecasts, reporting $116.1 million against an anticipated $108.58 million, driven by strong sales growth for its products Ibsrela and Xphozah. Additionally, Ardelyx secured approval from China’s Center for Drug Evaluation for its kidney disease drug tenapanor, marketed as Wan Ti Le, triggering a $5 million milestone payment from partner Shanghai Fosun Pharmaceutical (TADAWUL:2070). Meanwhile, BTIG initiated coverage on Ardelyx with a Buy rating and a $14 price target, citing potential profitability due to the growing traction of Ibsrela and Xphozah in key markets. On the other hand, H.C. Wainwright maintained a Neutral rating with a $5.50 price target, reflecting a cautious outlook amid challenges such as the Medicare Part D exclusion for Xphozah starting January 2025. Despite these challenges, Ardelyx’s strategic focus on expanding its sales force and enhancing communication efforts has contributed to its robust quarterly results. The company’s agreement with Fosun Pharma could potentially bring in up to $100 million more in developmental and commercialization milestones, along with tiered royalty payments. These recent developments highlight Ardelyx’s ongoing efforts to navigate market changes and achieve ambitious sales goals.
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