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Intermune (ITMN) PT Lowered To $33 By Brean Murray As Esbriet Sales Come In Light

 April 27, 2012 01:55 PM

(By Balachander) Brean Murray, Carret & Co. (BMC) lowered its price target on shares of InterMune Inc. (NASDAQ:ITMN) to $33 from $37 and said shares remain substantially undervalued on a risk-adjusted cash flow basis.

The company reported a $47.6 million loss, ending the quarter with $377.2 million in cash and $240.3 million in convertible debt. Overall revenue was $8.9 million. BMC said ITMN's Esbriet lung disease drug sales of $4.9 million in 1Q12 missed its expectation of $7.5 million and consensus estimates of $5.9 million.

"Topline Esbriet sales came in short of dampened expectations....We expect the top-line miss to further fuel negative sentiment plaguing the stock in recent weeks," the brokerage wrote. BMC has a "Buy" rating on the stock.

[Related -Analysts' Rating And Target Changes: AAPL, BA, DELL, ITMN, K, MOS, YELP]

"Although an actual breakout of new patient starts put the quarter in a more positive light, we see the decrease in new starts in Germany relative to last quarter as a disappointment and are adjusting our growth trajectory accordingly," BMC said.

The brokerage believes the last four months of the year will be a source of significant upside as it gets clarity on pricing in Germany, France, Italy and Spain. "Although it is possible that French pricing could come in earlier than September, we believe a September 15 price determination in Germany will recognize the value of Esbriet, albeit at a 10 percent - 20 percent discount to the current $40k per patient/year net price," BMC said.

[Related -Strong Pre-Election Session]

InterMune shares, which have been trading in the 52-week range of $9.66 to $46.13, tumbled 17.5 percent to trade at $10.27 on Friday.



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