On Friday, B. Riley, a financial services firm, upgraded their price target on Harrow Health (NASDAQ:HROW) shares to $73.00, a notable increase from the previous target of $50.00. The firm maintains a Buy rating on the stock. The adjustment comes after a closer examination of Harrow Health's leading ophthalmic pharmaceutical brands, which are showing a promising sales growth trajectory.
The analyst cited several reasons for the increased price target, including the prescription volume growth for Harrow Health's products IHEEZO and VEVYE. Additionally, the analyst highlighted two key developments in the fourth quarter that could add to the company's revenue streams: the resumption of TRIESENCE supply and the progress of Melt Pharmaceuticals' lead program MELT-300.
TRIESENCE, which recently came off the FDA shortage list on October 3, is expected to see heightened near-term order demand following the American Academy of Ophthalmology (AAO) 2024 conference, taking place from October 18 to October 21. Melt Pharmaceuticals, which is approximately 46% owned by Harrow Health and holds a right-of-first-refusal on MELT-300, is nearing a Phase III readout for its procedural sedation tablet used during cataract surgery.
MELT-300, a non-opioid sublingual tablet combining midazolam and ketamine, has shown statistically significant efficacy over comparator arms and placebo in Phase II trials. This positions it for potential success in the upcoming Phase III study and subsequent commercial uptake due to its non-intravenous, non-opioid, and effective sedation properties.
The strategic decisions surrounding MELT-300, whether to internalize or monetize it, remain uncertain. However, the analyst anticipates that Harrow Health's strong revenue growth, which is expected to outpace incremental operational expenses, could lead to a stronger balance sheet. This financial position might attract a higher market multiple, similar to ongoing speculations about a take-private deal for Bausch + Lomb Corp, a peer company in the ophthalmology space.
In other recent news, Harrow, a renowned eyecare pharmaceutical firm, has reported a series of significant developments. The company announced a record quarterly revenue of $48.9 million, marking a 46% year-over-year growth. This growth is attributed to the impressive performance of retina market products, IHEEZO and TRIESENCE, and the dry eye disease franchise VEVYE, which experienced a 212% increase in prescriptions in Q2.
In addition, Harrow has reintroduced its FDA-approved corticosteroid TRIESENCE, after a five-year absence due to supply chain issues. This product is now available for order through major pharmaceutical specialty distributors, marking a significant milestone for the company and the healthcare industry.
The company is also expanding its corporate headquarters in Nashville, Tennessee, which is expected to create nearly 150 new jobs. These recent developments underscore Harrow's robust financial performance and potential for future growth. However, the company maintains a disciplined approach to product launches and is cautious about overpaying for new products to add to its portfolio.
InvestingPro Insights
Harrow Health's recent performance aligns with B. Riley's optimistic outlook. According to InvestingPro data, the company's revenue growth stands at an impressive 50.06% over the last twelve months as of Q2 2024, with quarterly revenue growth at 46.22%. This robust growth trajectory supports the analyst's positive view on the company's leading ophthalmic pharmaceutical brands.
InvestingPro Tips highlight that Harrow Health has seen a significant return over the last week and is trading near its 52-week high, which corroborates the market's enthusiasm following the analyst upgrade. The stock's strong performance is further evidenced by its substantial 419.91% price return over the past six months.
However, investors should note that despite the strong revenue growth, Harrow Health is not currently profitable, with a negative operating income of $8.15 million over the last twelve months. This aligns with the InvestingPro Tip indicating that analysts do not anticipate the company to be profitable this year.
For those seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Harrow Health, providing a deeper understanding of the company's financial health and market position.
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