HCW starts Vanda at buy

H.C. Wainwright initiated coverage of Vanda Pharmaceuticals (NASDAQ:VNDA) with a “buy” rating and $18 price target. The stock closed at $14.05 on May 26.

“We think Vanda now has a solid base business, with both Fanapt and Hetlioz having long exclusivity periods capable of taking the company back to profitability with even mild growth,” writes analyst Corey Davis.

“We don't think any of the pipeline (primarily tradipitant) is priced in and hence, assuming success in clinical trials, could provide substantial upside,” he added.

Mr. Davis said the company has four important data readouts, including tradipitant Phase 2 in pruritus in the third quarter; tradipitant Phase 2 in gastroparesis in the fourth quarter, Hetlioz Phase 3 for jet lag in the fourth quarter and Hetlioz Phase 2/3 in Smith-Magenis Syndrome in 2018.

His discounted cash flow valuation projects at an $18 target, including success with tradipitant. “But if we're wrong, and tradipitant fails, we still calculate a $15 valuation without it; hence, we see little downside from current levels,” he added.