On Friday, Deutsche Bank adjusted its outlook on Indivior Plc (INDV:LN) (OTC: INVVY), reducing the price target to GBP12.50 from the previous GBP15.00. Despite this change, the firm maintained a Buy rating on the stock. The revision follows Indivior's release of preliminary third-quarter results and an updated forecast for Sublocade, its opioid addiction treatment, in response to various market challenges.
The pharmaceutical company now anticipates Sublocade net revenues for the third quarter to be between $187 million and $192 million. This projection is a slight decrease compared to the second quarter's $192 million and falls short of Deutsche Bank's estimate of $198 million.
The expectation shift comes amid increased competition, changes in inventory levels, and fluctuating funding pressures, particularly within Criminal Justice Systems.
Looking ahead, Indivior has also adjusted its full-year 2024 guidance for Sublocade to $725 million to $745 million, representing a 17% increase at the midpoint relative to the forecast for the fiscal year 2023. Based on an assumed $189 million in third-quarter revenue, the company projects fourth-quarter earnings to be between $165 million and $185 million.
Due to the revised third-quarter performance and future expectations, Indivior has decided to withdraw its goal of reaching a $1 billion exit rate for Sublocade in fiscal year 2025. However, the company has reaffirmed its ambition to achieve more than $1.5 billion in peak sales for the treatment. Indivior plans to pursue cost efficiencies as a strategy to drive growth and support profit margins amidst the changing landscape.
InvestingPro Insights
Recent InvestingPro data provides additional context to Indivior's current situation. The company's market capitalization stands at $956.42 million, reflecting the market's reaction to the revised outlook. Despite the challenges, Indivior's revenue growth remains positive at 14.47% over the last twelve months, with a robust gross profit margin of 79.42%.
InvestingPro Tips highlight some key points for investors to consider. The stock is currently trading near its 52-week low, which aligns with the recent price target reduction by Deutsche Bank. This could potentially present a buying opportunity for those who believe in the company's long-term prospects, especially considering that analysts predict the company will be profitable this year.
However, it's worth noting that Indivior is quickly burning through cash, which may be a concern given the competitive pressures and revised revenue expectations for Sublocade. This cash burn rate could explain the company's focus on cost efficiencies mentioned in their strategy to support profit margins.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Indivior, providing a deeper understanding of the company's financial health and market position.
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