Impax Laboratories (NASDAQ: IPXL) closed up 10% on Thursday after jumping 9.6% yesterday following its second-quarter earnings report. Today's move seems to be a continuation of yesterday's jump, perhaps fueled by reports of a Cowen analyst slapping a $20 price target on the stock, which is more than 20% higher than where it closed yesterday.
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It should be noted that an analyst at the Royal Bank of Canada reportedly has a $17 price target on Impax Laboratories, which doesn't offer much upside. Of course, the analyst had a prior target of $15, which was clearly off.
With better-than-expected adjusted earnings of $0.18 per share, above the consensus of $0.14 per share, it's clear analysts are scrambling to adjust their models. Nevertheless, both analysts have what essentially amounts to hold ratings on the drugmaker, so it's not like they've completely come around to Impax's potential.
Rather than worry about the day-to-day movements of Impax Laboratories' stock price, which is driven by the whims of analysts, investors should be focused on whether the company can keep its momentum going with more generic drug approvals, like its recent approval of its generic version of Concerta. They should watch how its specialty drug business is doing.
On the specialty pharma side, Albenza sales should normalize following the supply disruption last quarter, but the drug could see generic competition later this year. Fortunately, lower sales are already in its guidance, so if a competitor doesn't come to the market, Impax should be in great shape.
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