On Friday, BofA Securities updated its outlook on Tarsus Pharmaceuticals (NASDAQ:TARS) shares, increasing the price target to $63 from $60 while maintaining a Buy rating on the stock.
The adjustment follows Tarsus Pharmaceuticals' impressive first quarter performance, where sales of its Xdemvy (demodex blepharitis) treatment significantly exceeded expectations, generating $25 million against the consensus estimate of $17 million.
The successful launch of Xdemvy is attributed to positive reimbursement updates and higher than anticipated net realized pricing.
The company's first-quarter achievements have set a positive precedent, with management's projections for second-quarter volumes—expected to be on par with the first quarter—considered attainable by the analyst.
Consequently, the full-year 2024 sales forecast for Xdemvy has been revised upward to $156 million, up from the previous estimate of $114 million.
Despite the increased forecast, the price objective's moderate rise is tempered by a higher share count due to a follow-on offering and escalated sales and marketing investments aimed at supporting the accelerated sales trajectory.
Tarsus Pharmaceuticals' stock has already seen substantial year-to-date growth, bolstered by the Xdemvy launch's momentum.
The analyst firm remains optimistic about the future potential of Xdemvy, citing prescription trends, feedback from key opinion leaders, and comparable launch data.
With an estimated total addressable market that could support peak sales of approximately $1 billion for Xdemvy, BofA Securities reaffirms its Buy rating and lifts its price target, reflecting confidence in the drug's sales forecast increase.
InvestingPro Insights
With Tarsus Pharmaceuticals (NASDAQ:TARS) riding high on the successful launch of Xdemvy, it's crucial to take a closer look at the company's financial health and market performance. According to real-time data from InvestingPro, Tarsus holds a market capitalization of $1.29 billion, which speaks to its size and market presence. The company's revenue growth has been impressive, with a staggering increase of over 1000% in Q1 2024 compared to the previous quarter, and a solid year-over-year growth of 53.22%. This explosive growth aligns with the optimistic sales outlook for Xdemvy.
On the flip side, the company's gross profit margin remains negative at -25.16% for the last twelve months as of Q1 2024, indicating that despite the revenue increase, profitability challenges persist. This is further underscored by the InvestingPro Tip that analysts do not anticipate the company will be profitable this year. Moreover, the stock has experienced significant volatility, with a notable 7.63% dip in the past week, yet a substantial 103.83% return over the last year, highlighting both the risks and rewards associated with TARS.
Investors keen on diving deeper into Tarsus Pharmaceuticals' financials and market potential can explore additional InvestingPro Tips. Currently, there are 11 more tips available, which could provide further insights into the company's prospects. For those interested, a special offer is available: use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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