Friday - Lake Street Capital Markets initiated coverage on shares of Journey Medical Corp. (NASDAQ:DERM) with a Buy rating and a price target of $9.00. The firm highlighted the potential of Journey Medical's upcoming product, DFD-29, as a significant factor for the positive outlook. According to the analyst from Lake Street, DFD-29, which is nearing approval and launch, could become a leading therapy in its category due to its superior data compared to existing treatments.
The analyst predicts that the revenue from DFD-29 will contribute to significant revenue growth for Journey Medical and is expected to turn the company's adjusted EBITDA (AEBITDA) positive in 2025. The optimism is based on the anticipation that DFD-29 will dominate its therapeutic category and bolster the company's financials.
Lake Street's analyst expressed the view that the current share price of Journey Medical does not fully reflect the value that DFD-29 could bring to the company. The statement suggests that there is a material upside to the stock, which is currently undervalued in the market.
The coverage initiation and the setting of a $9.00 price target come as Journey Medical prepares for the pivotal moment of DFD-29's market entry. The analyst's comments indicate confidence in the drug's market potential and Journey Medical's growth trajectory following its expected approval and launch.
In other recent news, Journey Medical Corp has been making headlines with its Q2 financial performance and upcoming product launch. The company reported Q2 net product revenue of $14.9 million, exceeding expectations, largely due to the significant contributions of QBREXZA and Accutane, which brought in $12.6 million. B.Riley analysts maintained a positive outlook, reaffirming a Buy rating for the company's stock following these results.
Journey Medical's upcoming product, DFD-29, a rosacea treatment, has shown promising results in Phase III trials and is slated for a Prescription Drug User Fee Act (PDUFA) date on November 4, 2024. The company is also aiming for consistent cash flow positivity in the near term, as indicated by a positive adjusted EBITDA of $300,000 for the quarter.
However, the company announced the discontinuation of Amino by the end of Q3 2023 and a strategic reduction in sales territories from 70 to 35 by the end of 2024. Despite these changes, Journey Medical is looking to expand its dermatology portfolio through acquisitions or in-licensing. These recent developments are crucial for investors to consider in their evaluation of the company's future prospects.
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