On Thursday, JPMorgan (NYSE:JPM) resumed coverage on shares of Pacira Pharmaceuticals (NASDAQ:PCRX), issuing an Overweight rating and setting a price target of $45.00. The firm highlighted the pharmaceutical company's potential for significant growth in revenue and earnings, starting from 2025, due to a combination of regulatory progress, new indications for its products, and manufacturing improvements.
Pacira Pharmaceuticals specializes in the production and sale of non-opioid pain medications. The firm's optimism is partly based on the anticipated acceleration of Exparel's market uptake. This is expected to be spurred by the NOPAIN Act, which aims to reduce pricing hurdles, and the approval of Exparel for use in lower extremity surgeries.
JPMorgan projects that these developments could contribute to an almost 10% annual increase in revenue for Pacira, with forecasts showing a rise from $675 million to approximately $1.25 billion by 2030. On the earnings front, near-term manufacturing catalysts, such as scaling and more efficient facilities, are expected to help the company improve its gross margin from the current mid-70s percentage to around 80%.
This could potentially lead to earnings per share of approximately $6 in 2030, which would represent a compound annual growth rate of about 12%.
The firm's analysis suggests that the current market valuation of Pacira, with shares trading around $30, does not fully account for these anticipated growth drivers. With a price-to-earnings ratio of 10 times the next twelve months' earnings, JPMorgan believes that the market is undervaluing the company's prospects for growth.
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