Theravance Biopharma, Inc. (TBPH:NSD) is a biopharmaceutical company that focuses on developing and commercializing organ-selective medicines for various respiratory and gastrointestinal diseases. The company has a diversified pipeline of late-stage and early-stage candidates, as well as collaborations with major pharmaceutical companies such as Pfizer, GlaxoSmithKline, Mylan, and Janssen.
Q1 Earnings Analysis:
Theravance reported its first quarter fiscal 2023 results on May 8, beating analysts’ expectations on both revenue and earnings. The company posted revenue of $15.4 million, up 39.4% year-over-year (YOY), and above the consensus estimate of $14.9 million. The company’s adjusted earnings per share (EPS) came in at -$0.21, up 19% YOY, and above the consensus estimate of -$0.22.
The company’s revenue growth was driven by higher royalties from its respiratory products, such as Trelegy Ellipta and Yupelri, which are marketed by its partners GlaxoSmithKline and Mylan, respectively. The company’s earnings improvement was mainly due to lower operating expenses and higher interest income.
Theravance Biopharma Q2 Earnings Guidance:
The company also provided guidance for the second quarter fiscal 2023 and the full year fiscal 2023. The company expects revenue to be in the range of $16 million to $18 million for the second quarter, representing a YOY growth of 35% to 53%. The company expects revenue to be in the range of $62 million to $66 million for the full year, representing a YOY growth of 21% to 29%.
The company also expects its operating loss to be in the range of $55 million to $60 million for the second quarter and in the range of $200 million to $210 million for the full year. The company expects its net cash used in operating activities to be in the range of $190 million to $200 million for the full year.
Is Theravance Biopharma Stock a Buy or Sell?
Theravance Biopharma stock has declined about 24% in the past year, underperforming the S&P 500 index, which has gained about 16%. The stock has also declined about 15% year-to-date, underperforming the S&P 500 index, which has gained about 10%.
Theravance Biopharma stock currently trades at a trailing price-to-sales (P/S) ratio of 13.9, which is above its five-year average of 11.2 and the industry average of 9.6. TBPH stock also trades at a forward P/S ratio of 11.1, which is above its five-year average of 9.5 and the industry average of 8.2.
Theravance Biopharma stock has a Strong buy consensus rating among analysts, based on three buys and two holds. The average price target of $17 implies a potential upside of about 27% from the current price of $11.26 as of May 17.
TBPH stock also has a fair value estimate of $12.00 by Morningstar analysts, who assign a very high uncertainty rating to the company. A very high uncertainty rating means that the company’s future cash flows are highly variable or unknown.
Strengths:
The main strengths of Theravance are its diversified pipeline of organ-selective medicines, its strategic partnerships with major pharmaceutical companies, its royalty revenues from its respiratory products, and its strong cash position.
Risks:
The main risks for Theravance are the clinical and regulatory uncertainties associated with its pipeline candidates, the competitive pressure from other biopharmaceutical companies, the potential impact of the COVID-19 pandemic on its operations and clinical trials, and the high cash burn rate.
Conclusion:
Based on these factors, Theravance stock may be a buy for long-term investors who are looking for exposure to the organ-selective medicines market. The company has a solid track record of revenue and earnings growth, a reasonable valuation, a positive outlook for its core segments, and a moderate buy rating from analysts.
