United Therapeutics is the IBD Stock Of The Day as competition heats up in its bread-and-butter lung disease market. UTHR stock is eyeing two potential buy points.
The company is an expert in treating pulmonary arterial hypertension, a form of high blood pressure that affects the arteries in the lungs and right side of the heart. United sells several treatments for the condition, but is facing a looming rivalry with Merck. Merck is working on a first-in-class treatment for the same condition following its takeover of Acceleron Pharma.
UBS analyst Ashwani Verma isn't concerned about United's opportunity.
There's a "lot of pipeline activity in PAH, but limited direct impact to United's portfolio," Verma said in a December report. He initiated coverage of UTHR stock with a buy rating.
UTHR stock is finding support at its 21-day and 10-week moving lines, MarketSmith.com shows. It also formed a five-weeks-tight pattern with a buy point at 283.19. Shares could possibly find an earlier entry from a downward-sloping trend line around 278.
Shares edged up Thursday, closing 0.5% higher to 274.12 on the stock market today.
UTHR Stock: Tyvaso Diversifying
United Therapeutics sells a handful of treatments for pulmonary arterial hypertension, including two notable names, Tyvaso and Remodulin. Analysts expect sales of both rose during the fourth quarter. But Tyvaso sales are expected to soar more than 54% while Remodulin sales creep up 2.5%.
That's because Tyvaso sales are diversifying. United recently launched a new formulation of Tyvaso that uses a dry powder inhaler. The older form of Tyvaso utilized a different inhaled solution. United has also been able to gain approval for Tyvaso in patients with a rare lung disease called pulmonary hypertension associated with interstitial lung disease.
Verma, the UBS analyst, expects 57%-65% of patients with these diseases could use the new Tyvaso formulation. Meanwhile, another competitor is working on an alternative to Tyvaso. But Verma says Liquidia is unlikely to enter the market before March 2027.
"United's conversion to (dry powder inhaler) shields it from potential competition, while adding new patient growth for both (lung diseases)," he said. He also expects Tyvaso to be well shielded from Merck's experimental PAH treatment, sotatercept.
Verma assigned a 320 price target on UTHR stock.
Remodulin Could Stabilize
Remodulin sales, on the other hand, have struggled with generic competition. But United recently relaunched its Remunity pump, a wearable device to deliver Remodulin. This will help it differentiate from shot formulations.
"We believe that Remunity starts, and total patients, can grow in the near/medium-term, supporting our above-consensus sales assumptions," Verma said.
Still, UTHR stock analysts aren't that bullish yet on Remodulin. According to FactSet, analysts expect sales to decline from 2022 to 2026. Tyvaso sales, on the other hand, are projected to grow from $608 million in 2021 to $1.87 billion by 2026.
Bullishly, shares of United Therapeutics have a strong Relative Strength Rating of 96 out of a best-possible 99. This means UTHR stock ranks in the top 4% of all stocks when it comes to 12-month performance, according to IBD Digital.
The stock has a Composite Rating of 95. The CR is a 1-99 measure of fundamental and technical measures.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
