Cadence Pharmaceuticals (CADX) Fails to Meet High Analyst Expectations

Shares of biotech company Cadence Pharmaceuticals (CADX) plunged last week after its quarterly earnings missed analyst estimates. For its second quarter, Cadence reported a loss of $0.14 per share, missing the consensus estimate for a loss of $0.11 per share. Revenue came in at $24.7 million, topping the $24 million that analysts had expected, but that top line gain wasn't enough to appease investors. Daily Chart

Cadence is best known for its IV acetaminophen formulation Ofirmev, which reported healthy growth with total vial sales rising 123% to 2.2 million.
For the full year, Cadence now expects Ofirmev revenues to come in between $103 million to $105 million, up from its prior estimate of $97 million to $103 million, now in line with the consensus estimate of $104 million. In 2006, Cadence in-licensed the U.S. and Canadian rights to Ofirmev from pharma giant Bristol-Myers Squibb (BMY). Cadence launched Ofirmev in January 2012, which is primarily used to manage pain with adjunctive opioid analgesics and fever reduction. Bristol-Myers still produces the same pain reliever as Perfalgan in Europe and other international markets. To keep sales of Ofirmev going, Cadence extended its agreement with Bristol-Myers to December 2018. CEO Ted Schroeder was upbeat regarding Cadence's full year growth prospects. "We believe that usage of the product within our broad customer base will continue to increase, and our market share will grow," he stated. "I'm pleased with the momentum we have been able to maintain with our revenue growth." Even after Cadence's recent drop, the stock is still considered an expensive one, trading with a price-to-sales ratio of 10.2, compared to the industry average of 3.92. It also trades at 81 times forward earnings with a negative profit margin of -91%. In addition, its 5-year PEG ratio is currently negative, at -0.69, due to its lack of profitability. However, there is speculation that IV acetaminophen could become the de facto pain killer used in many major surgeries, in cases when narcotics and NSAIDs cannot be used. Analysts at JMP Securities support that view, rating Cadence as "market outperform," and raised its price target from $8.00 to $11.00. Analysts at Zacks also upgraded the stock from "neutral" to "outperform," with a price target of $8.30. In addition, analysts at UBS AG raised their price target on Cadence from $5.50 to $7.00, with a hold rating. Lastly, Ladenburg Thalmann analyst ratings consider Cadence a "buy," with a price target of $8.60. Other News About CADX Wider Loss at Cadence Cadence posts a wider than expected loss. Cadence Pharmaceuticals Misses Where it Counts Can the company assure investors that it can keep growing? Other Stocks in the News A Loser, a Winner, and a Hidden Gem in Affordable Luxury Which handbag maker will rise to the top? Will This Biotech Company's Big Bet Pay Off? Will Cubists' two big buys boost its top line growth? Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Aug 9, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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