BioTech companies can often trade on the stock market with similar behavior to pharmaceuticals, in that pipeline releases and updates will drastically affect the price action. In this case, LivaNova Plc (LIVN) has disposed of its heart valve business, and is instead focusing on vagus nerve stimulation (VNS) treatment for epilepsy. (See LivaNova stock charts on TipRanks)
Reporting on the stock is Anthony Petrone of the Jefferies Group, who wrote that LivaNova’s “financial profile should improve in the absence of the declining mechanical valve business.”
The deal to sell its heart valve business to Gyrus Capital will result in $73 million in cash payment to LivaNova. This is slightly above the original projections made, so it is possible to hypothesize that this has aided the biotech firm in beating Wall Street consensus estimates, according to Petrone.
Petrone assigned a Buy rating on the stock, and declared a price target of $105. This target suggests a potential 12-month upside of 22.19%.
The four-star analyst explained that the outlook of LivaNova’s VNS therapy is stable in the long-run in regards to patient usage. He added that “combo therapy would drive upside,” as 85% of doctors surveyed agreed that VNS implemented concurrently with Epidiolex/Fintepla (medications) can better control seizures.
There appears to be a backlog of refractive patients at health centers. Consequently, a slow recovery to recapture those who deferred procedures during the pandemic could add a whiff of caution to a stronger outlook. The backlog is anticipated to persist for another half year, despite it being “rapidly addressed.” As COVID-19 fades back, more patients are scheduling medical appointments to treat other issues.
Petrone sees a strong opportunity to capture upside for LivaNova, and, in turn, for the company’s investors. Its pipeline is stable, the company is improving operational efficiency, and it retains the ability to create inorganic growth through acquisitions and mergers.
On TipRanks, LIVN has an analyst rating consensus of Strong Buy, based on 5 Buy ratings. The average LivaNova price target is $101.40, reflecting a possible 12-month upside of 18%. The stock closed trading Wednesday at a price of $85.93.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
