With Sales Expected To Rise, Vanda Pharmaceuticals Stock Could Surge

Vanda Pharmaceuticals Inc. (VNDA) is a US biopharma marketer and developer of treatments intended to address specific unmet medical needs. Currently, even stronger demand is expected for the company’s products, with the total addressable market for its flagship drug set to increase.  

That said, the recent share price performance implies that Wall Street doesn’t fully appreciate its potential, creating an opportunity to acquire a stake in an asset with good growth perspectives and an affordable valuation.

From The Most Recent Quarter and Full Year

Fourth quarter GAAP earnings were $0.15 per share, beating the consensus estimate by $0.01. Additionally, total revenues for the quarter were $67.65 million, reflecting an 11% increase year-over-year and exceeding projections by $3.65 million.

For 2020, total revenues increased by 9% year-over-year to $248.2 million, driven by a 12% increase in net sales from Hetlioz and a 4% rise in net sales from Fanapt.

Hetlioz and Fanapt oral tablets are two products that Vanda Pharmaceuticals markets in the US, Europe, and Israel. The first is used as a treatment for non-24-hour sleep-wake disorder, while the second medication was designed to treat schizophrenia.

Looking ahead to 2021, management guided for a 15% increase in total revenues, and cash on hand of $400 million, about 10% more than last year. This will be used to develop effective marketing and sales strategies, and to complete studies aiming to expand the range of indications for Hetlioz.

Valuation

The stock appears to be relatively inexpensive. Shares are currently changing hands for about $15.84 apiece, with it still trading below the 50- and 100-day simple moving average lines.

Market Prospects

Hetlioz is the company’s flagship product as it makes up 65% of the total revenue, with the total addressable market for the therapy only expected to grow.  

Non-24-hour sleep-wake disorder is a circadian rhythm disorder and occurs because a patient’s internal clock and the light and dark phases of day and night are not synchronized. People affected by a loss of vision often suffer from this disorder, as the inability to see light prevents specific nerve cells in the brain that regulate this internal clock from being stimulated.

However, a strong rise in the frequency of the disorder is expected among people who have normal vision as more and more time is spent online during the late hours of the night.

Wall Street’s Take

In the last three months, one Buy rating and one Hold rating have been assigned by Wall Street analysts. So, Vanda Pharmaceuticals is a Moderate Buy. At $21.00, the average analyst price target indicates 33% upside potential. (See Vanda Pharmaceuticals stock analysis on TipRanks)

Summary

The 12% pullback over the last month might have concerned some investors, but at the same time, it has created an interesting opportunity to buy a stock that is likely going to deliver impressive returns.

Disclosure: On the date of publication, the author did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.