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Can Pacira Biosciences Go Up the Slope?
Stock Analysis & Ideas

Can Pacira Biosciences Go Up the Slope?

The last three months have not been favorable to Pacira Biosciences (PCRX), as shares have fallen by more than 7%.

The stock has the potential to go up the slope quickly, but it must convince the market its developments have a long-term perspective. Thus, I am bullish on this stock. (See Analysts’ Top Stocks on TipRanks)

Based in New Jersey, Pacira currently manufactures non-opiate analgesics for U.S. operating rooms, and to treat postsurgical pain.

Pacira’s medication, called Exparel, is in the form of an injectable suspension while its proprietary delivery technology, called DepoFoam, can prolong its action.

Additionally, Pacira owns the iovera system, a portable cryoanalgesia device that gives relief from local pain by freezing the affected nerve, dosing cold temperature precisely.

Most Recent Quarter

In the third quarter of 2021, Pacira sold analgesics and other products for total revenues of nearly $128 million. The turnover grew nearly 9% year-over-year, but it fell shy of projections by about $2 million.

Instead, the adjusted EPS of $0.72 beat the average consensus by $0.07. Adjusted EBITDA increased more than 40% year-over-year to $48.1 million, while the operating cash flow of $60.3 million was a 51.5% rise.

Total funds available in cash on hand and short-term investments amounted to $693.9 million.

Short, Long-Term Tailwinds

Many surgical operations and other medical procedures were canceled or postponed due to COVID-19. These will be gradually resumed as the situation in the U.S. hospitals normalizes, causing the demand for anesthetics and painkillers to spike.

Exparel is on track to obtain a patent expiration extension to January 2041 from the U.S. Patent and Trademark Office regarding its composition and manufacturing process. This should give a positive contribution to the longevity of Exparel’s net sales growth.

Following the acquisition of Flexion Therapeutics, Pacira will add another non-opioid-based treatment to its portfolio. Called Zilretta, this product is used to treat osteoarthritis knee pain. It is expected to add approximately $25 million to Pacira’s total net sales, and be accretive of earnings starting next year.

Looking Ahead

Commenting on Q3 2021 earnings results, Pacira chairman and CEO David Stack said: “We are on track to achieve our 5-year objective for top-line annual growth in at least the high teens with operating margins greater than 50 percent.”

Wall Street’s Take

PCRX has a Moderate Buy consensus rating, based on five Buys and two Holds assigned in the past three months.

The average Pacira price target is $79.43, implying 41% upside potential.

Final Take

The stock has declined significantly in the last couple of months. It should correct to the upside as recovery from COVID-19 goes on.

Disclosure: At the time of publication, Alberto Abaterusso did not have a position in any of the securities mentioned in this article.

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