On Wednesday, Ladenburg Thalmann adjusted its outlook on Ardelyx, Inc (NASDAQ: NASDAQ:ARDX) shares, reducing the price target to $12.50 from the previous $14.50 while maintaining a Buy rating for the stock. The firm's decision follows a reassessment of the potential market performance of Ardelyx's product XPHOZAH, leading to a more conservative forecast.
The revised valuation reflects a decrease in the peak sales projection for XPHOZAH to $218 million, significantly lower than the prior estimate of $530 million. This change is attributed to heightened uncertainty surrounding the drug's prospects. Additionally, the discount rate applied in the valuation has been increased to 70%, up from the previous 40%, indicating a more cautious stance on the asset's risk profile.
Despite the reduction in the price target, the analyst emphasized the continued confidence in the stock with a reiterated Buy rating. The investment thesis focuses primarily on the value of IBSRELA, another Ardelyx product, which is considered to contribute $10 per share to the overall price target.
IBSRELA remains at the core of the investment rationale for Ardelyx, as highlighted by the analyst. This product is seen as a major element of the company's value proposition to investors, underpinning the positive outlook despite the adjustments made to the expectations for XPHOZAH.
The updated price target of $12.50 reflects the new sales and risk assessments while still acknowledging the potential value Ardelyx holds within its product portfolio. The firm's analysis indicates a continued belief in the company's prospects, despite the more conservative estimates for one of its key products.
In other recent news, Ardelyx, Inc. reported significant growth for the first quarter of 2024, with total product-related revenue reaching $45.6 million. This increase was driven by its products IBSRELA and XPHOZAH, which contributed $28.4 million and $15.2 million in net sales revenue respectively. The company also maintained a strong cash position, with a reported $202.6 million at the end of the quarter.
In a strategic move, Ardelyx decided not to include its kidney disease drug XPHOZAH in the Medicare Prospective Payment System (PPS). The company believes this decision is crucial to ensure patient access to the drug, which is used to treat elevated serum phosphorus in adults with chronic kidney disease on dialysis.
Ardelyx is also supporting bipartisan legislation that could extend the exclusion of oral-only medications from the Medicare ESRD PPS, aiming to ensure continued patient access to XPHOZAH.
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