"Now is the time to own Amarin shares over the balance of 2012, we believe."
Sounds bullish, as does Lazard's $26 price target, but take a closer look at the "valuation matrix" for Amarin offered by analyst Bill Tanner because it paints a less rosy picture.
Tanner concocts 10 possible commercial scenarios for Amarin's prescription fish-oil pill Vascepa. Four of them value Amarin shares between $4 and $11, meaning at or below the current stock price. The other six scenarios value Amarin shares between $13 and $39.The average price of Tanner's Amarin "valuation matrix" works out to $17 per share -- a 50% bump from the stock's current level. Not bad, but a lower price target than the one espoused by die-hard Amarin bulls. By the way, if you throw out the low and high scenarios in Tanner's calculations, Amarin's fair value falls to $15 per share, which is basically where the stock traded when Vascepa was approved in July. [And when Amarin insiders sold a large chunk of stock.] Sell-side analysts tend to be trailing indicators and that's certainly the case with Amarin. Investors have already figured out that Vascepa's future is clouded by uncertainty over the long-delayed FDA decision on New Chemical Entity (NCE) status and the company's failure to spell out a clear commercialization plan. In this regard, analysts are telling investors stuff they already know. Read through the most recent batch of Amarin sell-side notes and you'll notice a ratcheting down of expectations. Bullish takeout predictions are being discarded or significantly discounted. There's an admission now that the Vascepa NCE decision -- three or five years of market exclusivity -- is important where it was once regarded as trivial. And perhaps most interesting, analysts are now talking more about the possibility that Amarin markets Vascepa on its own, without a Big Pharma partner. Jefferies analyst Thomas Wei, in a recent Amarin note: "We believe it would be prudent for investors to assume that Amarin may very well announce that it plans to launch Vascepa on its own..." [Wedbush downgraded Amarin in early October for similar reasons.] Amarin was supposed to provide details about Vascepa's commercial launch this month but that announcement has apparently been pushed back to November. Last year, Amarin announced third-quarter results on Nov. 7, so the company should have something to say fairly soon. Amarin shares were down 1.5% to $11.09 in Monday trading. -- Reported by Adam Feuerstein in Boston. Follow @AdamFeuerstein
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