At roughly 13 times forward earnings, I feel this is a fair price for a name you can trust throughout the remainder of the decade, if not longer.
Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ)
The month of May has been pretty turbulent and certainly sleep-depriving for shareholders in Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ). The biopharmaceutical company, which derives 60% of its revenue from narcolepsy treatment Xyrem, reported a near doubling in revenue and upped its EPS forecast well beyond its own previous guidance for the full year, but also commented that the Food and Drug Administration may approve a generic version of Xyrem currently being developed by rival Roxane Labs.
Investors, though, should certainly keep a level head because any weakness here looks like a viable buying opportunity in a still rapidly growing biopharma company. To begin with, Xyrem sales have been on fire, growing 60% in the past quarter. That wouldn’t be too meaningful were it not for the fact that Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA)‘ Provigil’s patent expired and sales dipped 92% year over year in its latest quarter. Furthermore, Nuvigil, the next-generation Provigil, also saw sales fall by 1%. To me this signals that Xyrem is cleaning up by taking market share in a relatively underserved narcolepsy treatment market.
The other factor that makes Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ) an intriguing candidate is that the likelihood of the FDA allowing Roxane to bring a generic version of Xyrem to market appears pretty slim. It’s more likely that Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ) would settle with Roxane long before that happened in order to secure the exclusivity of its lead drug. Jazz’s decision to boost its EPS forecast this year only reinforces management’s confidence in the company continuing to exceed expectations.
Foolish roundup
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The article 3 Stocks to Get on Your Watchlist originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Fluor.
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