Tuesday, Verrica Pharmaceuticals (NASDAQ:VRCA) received a positive assessment from H.C. Wainwright, with the firm increasing the price target on the company's shares to $14.00 from $13.00, while maintaining a Buy rating.
The adjustment follows Verrica's recent report of over $3.2 million in product sales for YCANTH, a treatment for molluscum contagiosum, which outperformed both the analyst's forecast of $2.9 million and the consensus estimate of $2.7 million.
The company's sales for YCANTH in the second full quarter post-launch surpassed expectations, without the anticipated inventory work-down from the first quarter. The higher sales figures were achieved despite a lower average number of applicators per patient than projected, suggesting that patient volumes are exceeding forecasts. This is seen as a positive indicator of the drug's adoption and its ability to meet high unmet demand.
Verrica has also reported progress in other key areas. The total number of covered lives has increased to 228 million, up from over 200 million after the fourth-quarter results. Additionally, the buy-and-bill distribution model now represents approximately 40% of prescriptions, doubling from the previous 20%. This model is not only a potential profit center for healthcare providers but also improves Verrica's unit economics.
The recent issuance of a permanent J-Code in January, which was published on April 1, is expected to further support the buy-and-bill practice. As medical practices become more comfortable with the insurance reimbursement process, a mid-year acceleration in uptake is anticipated. The company's strategy is also bolstered by the deployment of 20 additional pediatric sales representatives as of April 1.
In light of these developments, H.C. Wainwright has revised its expectations for YCANTH sales and Verrica's operating margins for the year 2025 and beyond, leading to the increased price target for the company's stock.
InvestingPro Insights
As Verrica Pharmaceuticals (NASDAQ:VRCA) receives a vote of confidence from H.C. Wainwright, real-time data and analysis from InvestingPro further enrich the narrative. With a market cap of $405.54 million, Verrica is trading near its 52-week high, at 99.48% of this peak, showcasing investor optimism. This is supported by the company's significant price total return over the last six months of 226.28%, underlining strong market performance.
However, the InvestingPro Tips highlight that while analysts anticipate sales growth in the current year, they do not expect the company to be profitable this year. Additionally, the RSI suggests the stock is currently in overbought territory, which might indicate a potential retraction or price correction ahead. For those looking to delve deeper, there are additional InvestingPro Tips available, providing a comprehensive view of Verrica's financial health and market position.
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