ViroPharma (NASDAQ:VPHM) updated investors last week at the JP Morgan Healthcare conference, offering 2013 guidance for lead product Cinryze, which was strong. The company expects 2013 sales in the range of $450M to $475M, with U.S. Cinryze sales accounting for $390M – $400M of this year’s revenues. The guidance indicates significant growth for Cinryze in 2013 – an estimated range of 21.5%-24.6%. However, guidance that Cinryze would come in at the lower end of the range in 2012 due to excess inventory at wholesalers caused the shares to dip after the company gave guidance, and limited catalysts approaching also could be keeping some investors away. Wholesaler inventories are anticipated to normalize in early 2013, and the company has increased its selling resources behind Cinryze, which many analysts believe will results in upside to expectations. The company recently expanded its U.S. Cinryze salesforce by one third to 32 reps, and is now broadening its focus to patients outside the allergy segment. VPHM’s sales force is now working on identifying patients in the primary care, OB/Gyn, and gastroenterology segments, where patients that have hereditary angioedema (HAE), but have been misdiagnosed, exist. As a result, VPHM’s recent weakness and potential to surprise on the upside provides investors with a buying opportunity. In fact, this morning, a Bank of America analyst upgraded VPHM on the growth prospects of Cinryze and other pipeline products, and we note that analyst price targets (averaging $35) indicate that shares of VPHM, currently priced at $25, are substantially undervalued. We expect VPHM shares to bounce off of their recent lows, react positively to Tuesday’s upgrade (from Neutral to Buy), and to continue to rise over the next several months as the company pushes Cinryze sales higher.
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