Oppenheimer starts Amarin with $7 target on 'rich' valuation, 'stale' M&A thesis

Oppenheimer analyst Leland Gershell initiated coverage of Amarin with an Underperform rating and $7 price target. The stock closed Tuesday up 13c to $22.73. Amarin's current valuation reflects expectations that, following near-term label expansion of sole omega-3 product Vascepa, the company's sales will inflect and grow to $2B-plus by 2024 and its operating margins will meaningfully improve, Gershell tells investors in a research note. The analyst, however, forecasts Amarin's sales growth to "underwhelm" and that "heavy selling costs" will impede its profitability. Furthermore, a 12-month stream of late-stage competitor data starting next month will increasingly weigh on shares as these products will offer superior profiles, adds Gershell. In addition, the analyst thinks the likelihood of Amarin getting acquired will only shrink with time. He views Amarin's valuation as "rich" and the M&A thesis as "stale."