Analyst sees 24% upside for Harmony Biosciences stock as it maintains outperform rating

On Thursday, Harmony Biosciences Holdings Inc. (NASDAQ:HRMY) saw its price target raised to $52.00 from the previous $42.00, while its stock rating remained at Outperform. The increase follows a review of the company's financial model after a recent investor day presentation.

The revised model includes several key changes. For the first time, revenue projections for EPX-100, which is being developed for conditions such as Dravet Syndrome (DS) and Lennox-Gastaut Syndrome (LGS), have been factored in. Additionally, expectations for the high dose of pitolisant, used in the treatment of narcolepsy, idiopathic hypersomnia (IH), and myotonic dystrophy (DM), have been incorporated.

There has also been an upward adjustment in the forecast for ZYN-002, a treatment for Fragile X Syndrome (FXS). The company has reintroduced a revenue contribution for Wakix/pitolisant in the treatment of IH, which had been previously removed from projections.

The financial model now also reflects increased operating expenses (OpEx), which are anticipated due to the expansion and development of Harmony Biosciences' product portfolio. The firm believes that these changes position the company on the brink of a significant transformation.

The analyst expressed confidence in the company's trajectory, stating, "Overall, we believe HRMY is on the cusp of a significant company transformation, and seeing multiple reasons (and opportunities) for the stock to move higher over the next 12-24 months, we reiterate our OP rating on HRMY, a current top idea." Harmony Biosciences' new strategies and expanded portfolio are expected to drive the stock's performance in the near to mid-term future.

In other recent news, Harmony Biosciences reported a 29% rise in net sales for its product WAKIX in Q2, reaching $172.8 million, and a solid non-GAAP adjusted net income of $60.6 million. The company's financial position remains strong, holding $434.1 million in cash, cash equivalents, and investments.

Harmony Biosciences is on track to meet its 2024 net revenue guidance of $700 million to $720 million. Piper Sandler maintained an Overweight rating on Harmony Biosciences, highlighting the company's growth strategies and pipeline developments. However, Goldman Sachs reiterated its Sell rating, citing the need for further clinical validation of the company's pipeline. Meanwhile, Mizuho and Needham sustained their positive ratings on the company.

Harmony Biosciences has also made significant progress in its high-dose pitolisant program, targeting unmet medical needs in the narcolepsy community, and received FDA approval for WAKIX for pediatric narcolepsy. A planned sNDA for idiopathic hypersomnia is expected later this year.

InvestingPro Insights

Recent InvestingPro data provides additional context to Harmony Biosciences' (NASDAQ:HRMY) financial health and market position. The company's market capitalization stands at $1.91 billion, with a P/E ratio of 16.97, indicating a relatively moderate valuation compared to earnings. This aligns with the analyst's optimistic outlook and increased price target.

InvestingPro Tips highlight that management has been aggressively buying back shares, which often signals confidence in the company's future prospects. This action complements the analyst's view of HRMY being on the cusp of significant transformation. Additionally, the company's valuation implies a strong free cash flow yield, suggesting potential for continued investment in its expanding product portfolio.

The revenue growth of 31.52% over the last twelve months and a robust gross profit margin of 79.41% underscore HRMY's strong financial performance. These metrics support the analyst's confidence in the company's trajectory and the potential for stock appreciation.

For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Harmony Biosciences, providing deeper insights into the company's financial health and market position.

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