Laurentian Bank Securities analyst Joseph Walewicz says there were some bright spots in Merus Labs’s third quarter, including the performance of C.difficile treatment Vancocin.
third quarter results were a downside surprise but the stock is still a buy, says Laurentian Bank Securities analyst Joseph Walewicz.
Yesterday, shares of Merus fell after the company reported third quarter results that disappointed the street.
The company lost $1.6-million on revenue of $9.5-million, a performance CEO Barry Fishman described as “challenging” and blamed on inventory normalization with a new German distributor.
Walewicz notes that the quarter fell below his expectations, which were lower than the street consensus. But the analyst says there is still a lot of value in Merus Labs for investors with a longer time horizon.
“We recognize that Fiscal Q3 was a surprise, but the fundamentals remain intact and the valuation is compelling,” said Walewicz. The analyst points out that there were some bright spots in the quarter, notably the performance of Vancocin and the first few weeks of Estraderm and Salagen. But he says these successes were not enough to overcome the German inventory levels adjustments or the foreign exchange pressures that dragged down Emselex/Enablex revenue.
In a research update to clients today, Walewicz maintained his “Buy” rating on Merus Labs, but lowered his one year target price on the stock from $3.75 to $3.40.
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