Pacira Biosciences, Inc.

PCRX Details

Pacira Biosciences, Inc. (NASDAQ: PCRX) is a pharmaceutical company, which develops and commercializes non-opioid pain management and regenerative health solutions through its DepoFoam product delivery technology for medical use in the United States. PCRX has commercialized EXPAREL which consists of an amide-type local anesthetic, injected at the time of surgery to control pain. It is also developing the Iovera system which is hand operated Cryoanalgesia device used to relieve pain by freezing the affected nerves. As of June 28, 2021, the company’s market capitalization stood at USD 2.70 billion.

Expanding Footprint through Collaboration: On June 22, 2021, the company announced that it has entered into a manufacturing and distribution agreement with Eurofarma Laboratories S.A. for EXPAREL. Under this agreement, EXPAREL will now be made available in 19 Latin American countries. Eurofarma will oversee the regulatory requirement in all these countries and will make payments for royalties to PCRX upon commercialization of EXPAREL.    

Q1FY21 Results: PCRX reported total revenue of USD 119.03 million for Q1FY21 (ending March 31, 2021) as compared to USD 105.68 million in Q1FY20, thus realizing growth of 12.63% YoY. The increase in topline can be attributable to higher sales volume accompanied by favorable pricing. PCRX reported an uptick of 13.71% YoY in operating profit in Q1FY21 and achieved an operating income of USD 19.43 million compared to USD 17.09 million in Q1FY20. The company reported a net income of USD 10.37 million with a net margin of 8.71% in Q1FY21 vs USD 8.16 million in Q1FY20.  

Key Risks:  PCRX currently has a single product offering, i.e., EXPAREL. In FY20, it contributed 96% of PCRX’s total revenue. Any fall in the demand for or disruption in the production of EXPAREL would hurt the financials of the company. Furter, PCRX must conduct its business in the ambit of a strict regulatory environment, non-observance of norms could lead to recall or even suspension of the products. In addition, the COVID-19 pandemic has led to the suspension of elective surgeries in most of the U.S. states, any prolonged suspension of elective surgeries by the government could harm the operational performance of the company.

Outlook: As of Q1FY21, PCRX expects to continue to witness the negative impact of the COVID – 19 pandemic on its product sales due to disruption in the scheduling of elective surgeries.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

PCRX Daily Technical Chart

Stock Recommendation: PCRX has increased 5.20% in the past 6 months, respectively, and is currently in the middle zone of the 52-week range of USD 42.67 to USD 80.00. The stock is currently trading marginally lower than its 50 and 200 DMA levels, and its RSI Index is 48.94. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 65.26. Considering the uptick in the stock price, high growth potential, improvement in profitability, and associated risks, we recommend a “Watch” rating on the stock at the closing price of USD 61.42, down by 3.31% as of June 28, 2021.

* All forecasted figures and Industry Information have been taken from REFINITIV.

* The reference data in this report has been partly sourced from REFINITIV.