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Jefferies has adjusted its price target for Amphastar Pharmaceuticals (NASDAQ: NASDAQ:AMPH), a company specializing in generic and specialty pharmaceuticals, reducing it to $55.00 from the previous $62.00. Despite this change, the firm retains a Buy rating on the stock.
The revision follows Amphastar's second-quarter results, prompting Jefferies to update its financial model. The firm expressed continued confidence in Amphastar's revenue growth, profitability, and financial flexibility.
These factors are bolstered by the company's pipeline, which includes complex generics that are challenging to develop. Several product launches are expected in 2024, which could enhance the company's growth trajectory.
Additionally, the acquisition of Baqsimi, a nasal powder for the treatment of severe hypoglycemia in diabetes patients, is anticipated to contribute positively to Amphastar's financial performance.
The new price target of $55.00 is based on a 9x multiple of Jefferies' estimated EBITDA for the calendar year 2025 (C25E EBITDA). This valuation reflects the firm's assessment of Amphastar's future earnings before interest, taxes, depreciation, and amortization.
Amphastar Pharmaceuticals recently received FDA approval for its new generic inhalation product, AMP-008, a development confirmed by Piper Sandler. The product is a generic version of Teva's ProAir HFA and is set to be available in the third quarter of 2024. This approval is expected to significantly contribute to Amphastar's revenue, given the limited competition in the high-volume categories of drug/device combinations.
The market for albuterol HFA generics is substantial, with over 50 million prescriptions filled in 2023. The approval of AMP-008 positions Amphastar to meet this demand, potentially leading to a stable increase in sales. Aside from AMP-008, Amphastar is predicted to experience growth in EBITDA, enhanced by the margin-expansive impact of Baqsimi, another product in the company's portfolio.
InvestingPro Insights
Amphastar Pharmaceuticals' recent performance and future prospects have drawn attention from analysts and investors alike. According to real-time data from InvestingPro, Amphastar has a market capitalization of $2.11 billion and is trading at a P/E ratio of 12.59, which aligns with a near-term earnings growth outlook. This is further supported by a PEG ratio of 0.2, indicating potential undervaluation relative to earnings growth expectations. The company's revenue growth has been impressive, with a 31.8% increase over the last twelve months as of Q2 2024, and a gross profit margin standing strong at 55.06%.
InvestingPro Tips highlight that management's aggressive share buyback strategy and the fact that 4 analysts have revised their earnings upwards for the upcoming period could signal confidence in the company's financial health. Additionally, the company's valuation implies a strong free cash flow yield, and liquid assets exceeding short-term obligations provide financial flexibility. There are 9 additional InvestingPro Tips available that could offer deeper insights into Amphastar's investment potential, accessible via InvestingPro's platform.
These metrics and insights could be particularly relevant for investors considering Amphastar's stock, especially in light of recent price target adjustments by firms like Jefferies. The company's robust revenue growth and strong gross profit margin are factors that could contribute to its positive outlook, aligning with Jefferies' confidence in Amphastar's revenue growth and profitability. As the company prepares for several product launches in 2024 and integrates its recent acquisition, these InvestingPro data points and tips offer a valuable perspective for those tracking Amphastar's financial journey.
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