Eyecare pharmaceutical company Harrow (NASDAQ:HROW) has seen its newly launched medication, VEVYE, skyrocket. The new product has grabbed the market’s attention, helping drive the stock’s share price up over 55% in the past 90 days. With expectations for the new drug’s ongoing growth and a renewed focus on the company’s other ophthalmic pharmaceuticals, the stock’s prospects for a long-term upside looks promising.
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Harrow’s Strategic Focus
Harrow is an eyecare pharmaceutical company that produces ophthalmic solutions for eyecare markets. Its pharmaceutical products are widely utilized in ophthalmic surgeries such as cataract and refractive surgeries, as well as chronic ophthalmic conditions like glaucoma, dry eye disease, allergies, and infections.
The company’s strategic focus is implementing three crucial operational initiatives. The first is growing a robust dry eye disease franchise built upon the successful rollout of VEVYE. The second is enhancing their existing retina franchise, which includes ocular anesthetic, IHEEZO, and the corticosteroid TRIESENCE. Lastly, the company is stabilizing its subsidiary ImprimisRx and its Anterior Segment Products by returning them to a growth-centric trajectory.
Recent Financial Results & Outlook
Harrow recently announced financial results for Q1 2024. Net revenues increased significantly to $34.59 million from $26.1 million in the same period last year; however, they fell short of analysts’ expectations of $37.27 million. The company’s net loss also rose from $6.64 million to $13.56 million. Earnings per share of -$0.28 also fell short of the forecasted EPS of -$0.20.
At the end of the quarter, the company reported $76 million in cash and cash equivalents. After the first quarter, Harrow added $5.5 million to its cash from selling non-strategic holdings in Eton Pharmaceuticals.
What Is the Price Target for HROW Stock?
Analysts following the company are constructive on the stock. B. Riley analyst Mayank Mamtani recently raised the price target for the stock from $26 to $29 while maintaining a Buy rating, citing the company’s updates signaling progress in each of the three operational initiatives.
Harrow Health is rated a Strong Buy based on three Wall Street analysts’ recommendations and price targets over the past three months. The average price target for HROW stock is $25.00, representing an upside of 45.18% from current levels.
The stock has climbed over 75% in the past six months and sits in the upper half of its 52-week price range of $7.60-$24.19. It continues to show positive price momentum, trading above its 20-day (13.46) and 50-day (12.30) moving averages. At these levels, the stock appears relatively richly valued, with a P/S ratio of 4.2x well above the Specialty & Generic Drug Manufacturers industry average of 2.17x
Summary
The successful launch of a new treatment has animated the shares of Harrow Health, setting them on an upward trajectory. The company looks to keep the momentum going by implementing strategic initiatives and has shown progress in that regard. While the stock looks relatively pricey at these levels, it could reflect the premium for growth that market participants already expect from the stock, suggesting growth at a reasonable price (GARP) opportunity for long-term investors.
