The pharmaceutical company, which specializes in therapeutic products for the central nervous system, has a treatment with "blockbuster" potential, analysts said.
"Avanir's lead asset is AVP-923 which is being developed in various central nervous systems indications," analysts said, adding, "Recently phase two AVP-923 data surprised on another indication, agitation in Alzheimer's disease (AD)."
An in depth report on the AD agitation market conducted by Deutsche analysts yielded the following insight: AD agitation has blockbuster potential in the US (up to 35% of the treatable market at peak), there are further expansion opportunities in CNS for their lead asset, and a larger pharma player could help expand global AD agitation opportunity.
Shares of Avanir are up 0.85% to $13.04 in pre-market trading.
Separately, TheStreet Ratings team rates AVANIR PHARMACEUTICALS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AVANIR PHARMACEUTICALS INC (AVNR) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Pharmaceuticals industry average. The net income has decreased by 11.2% when compared to the same quarter one year ago, dropping from -$11.42 million to -$12.70 million.
- Net operating cash flow has decreased to -$16.08 million or 23.91% when compared to the same quarter last year. Despite a decrease in cash flow AVANIR PHARMACEUTICALS INC is still fairing well by exceeding its industry average cash flow growth rate of -65.17%.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, AVANIR PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for AVANIR PHARMACEUTICALS INC is currently very high, coming in at 95.13%. Regardless of AVNR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AVNR's net profit margin of -44.35% significantly underperformed when compared to the industry average.
- AVANIR PHARMACEUTICALS INC reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, AVANIR PHARMACEUTICALS INC reported poor results of -$0.53 versus -$0.45 in the prior year. This year, the market expects an improvement in earnings (-$0.29 versus -$0.53).
- You can view the full analysis from the report here: AVNR Ratings Report