On Wednesday, Goldman Sachs (NYSE:GS) reiterated a Neutral rating with a steady $41.00 price target on shares of Tarsus Pharmaceuticals (NASDAQ:TARS), currently trading at $44.33 with a market capitalization of $1.69 billion. According to InvestingPro data, analysts maintain a strong buy consensus with price targets ranging from $41 to $84.
The firm's stance comes as Tarsus discussed its 2025 outlook, highlighting growth opportunities, particularly regarding the development of TP-04, a topical gel for treating ocular rosacea. Ocular rosacea is believed to be caused by Demodex mite infestation, and there is evident interest and demand from eye care practitioners for such a product.
Tarsus is currently finalizing the assessments and scales to measure redness and vessel dilation, which are the endpoints agreed upon with the FDA, for their upcoming Phase 2 study. This study is expected to begin in the second half of 2025, with initial proof-of-concept data anticipated in 2026. InvestingPro analysis shows the company maintains a strong financial position with a healthy current ratio of 5.42 and more cash than debt on its balance sheet, providing adequate runway for its development programs.
Goldman Sachs notes the expansion into ocular rosacea as a logical step for Tarsus, given the potential for leveraging synergies across the company's existing eye care call universe in Demodex blepharitis (DB) and adjacent indications to support a strong product launch.
In the interim, investor focus is expected to remain on the ongoing launch of Xdemvy in DB, where prescription trends suggest robust prescribing. This success is likely aided by the expansion of the sales force and the initiation of direct-to-consumer campaign launches last year.
Goldman Sachs' maintained rating and price target reflect a watchful but optimistic view of Tarsus's strategic moves and product pipeline. As the company progresses toward its Phase 2 study for TP-04 and continues to push the Xdemvy launch, investors will be looking for signs of sustained growth and market penetration in the eye care sector.
Despite a recent 19.75% decline over the past week, InvestingPro data reveals an impressive 100.59% return over the past year. The stock currently appears slightly undervalued based on InvestingPro's Fair Value analysis, with 12 additional ProTips available to subscribers.
In other recent news, Tarsus Pharmaceuticals has secured a new headquarters in Irvine, demonstrating a commitment to growth with a projected 9% revenue increase for the current year. The company has also reported record-breaking sales for its product, XDEMVY, with net sales reaching $48 million in Q3 2024.
Analysts from H.C. Wainwright and Guggenheim maintain a Buy rating for Tarsus, with H.C. Wainwright adjusting the stock target from $61.00 to $73.00 due to strong sales performance.
In addition to these developments, Tarsus is working towards securing FDA approval for two additional treatments by the end of 2024 and expects European approval for XDEMVY by the second half of 2027.
The company has also expanded its sales force from 100 to 150, securing over 80% coverage through commercial and Medicare contracts. This growth in prescription volume is attributed to the company's recent expansion of its sales force and the initiation of its first direct-to-consumer campaign, "Your Mitey Problem."
These recent developments reflect Tarsus Pharmaceuticals' commitment to expanding its offerings while maintaining a strong focus on XDEMVY's growth and market presence. However, operating expenses remain high at approximately $73.3 million.
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