Roth downgrades NovaBay Pharma to neutral; PT to $4 from $5

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Roth Capital Partners downgraded NovaBay Pharmaceuticals (NYSE American:NBY) to “neutral” from “buy” and lowered its price target to $4 from $5, pending renewed prescription growth for the eyelid hygiene treatment Avenova.

Analyst Scott Henry writes that while fourth quarter results were strong, Avenova prescription growth has trailed off, indicating challenges for the first half of 2018. Weekly prescription rate is currently about 1,450 versus highs of near 1,900 set in May 2017.

“This may be a function of fewer reps (39 today versus 46 in 2017),” he said, noting that on the conference call, management indicated that it intends to increase reps in the second half of 2018, “but scripts are expected to be down in the first quarter.”

Mr. Henry said the company is cutting costs and making the business more efficient, “but ultimately growth will be needed to drive profits to shareholders, in our opinion.”