On Wednesday, Needham, a well-known investment firm, adjusted its outlook on Heron Therapeutics (NASDAQ:HRTX), increasing the price target to $5.00 from the previous $4.00. The firm reaffirmed its Buy rating for the pharmaceutical company following a report of stronger than expected fourth-quarter sales in 2023.
Heron Therapeutics surpassed Wall Street's expectations with fourth-quarter sales reaching $34.2 million, compared to the forecast of $31.2 million. This performance was attributed to significant uptake of its products Zynrelef, Cinvanti, and Sustol. The company's robust end to the year is anticipated to bolster confidence in its ability to achieve its annual revenue guidance, which is set between $138 million and $158 million. This represents a year-over-year increase of 9% to 24%.
The firm also highlighted Heron's aim for a positive EBITDA by the fourth quarter of 2024. The company plans to continue improving its gross margins, targeting over 70% up from approximately 49% in 2023, and reducing adjusted operating expenses to between $108 million and $116 million, which would be a 9% to 16% decrease year-over-year.
Focus in 2024 will be on the growth of Zynrelef following its recent label expansion, the implementation of a promotional partnership which is expected to expand the sales force by approximately 650 representatives, and the anticipation of approval for the VAN needle.
In their commentary, Needham stated that they are maintaining the Buy rating and adjusting the price target to reflect model adjustments and recent sales trends. They noted that it might take a few quarters of improving sales to demonstrate progress towards Heron's proposed profitability path.
InvestingPro Insights
As Heron Therapeutics (NASDAQ:HRTX) garners a positive outlook from Needham, it's important to delve deeper into the company's financial health and market performance. InvestingPro data reveals a market capitalization of $354.17M, suggesting a moderate size within the pharmaceutical industry. Despite the reported strong fourth-quarter sales, Heron Therapeutics exhibits a negative P/E ratio of -2.63, indicating that investors are yet to see profits materialize. Furthermore, the company's revenue growth over the last twelve months stands at 24.96%, aligning with the higher end of its annual revenue guidance.
While the company's gross profit margin is relatively low at 5.69%, Heron Therapeutics has seen a substantial price total return of 40.48% over the last three months, hinting at investor optimism. This is further supported by a large price uptick of 85.83% over the last six months. However, one of the InvestingPro Tips points out that the stock price movements for Heron Therapeutics are quite volatile, which could be a consideration for risk-averse investors. Additionally, it's noted that analysts do not anticipate the company will be profitable this year, which may temper expectations despite the recent positive sales trends.
For readers looking to explore more about Heron Therapeutics' financial outlook, there are additional InvestingPro Tips that offer deeper insights. By visiting https://www.investing.com/pro/HRTX, readers can find out more about the company's cash burn rate, gross profit margins, and how its liquid assets stack up against short-term obligations. As a special offer, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a total of 9 InvestingPro Tips that could further inform investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.