JAZZ - Jazz Pharma upgraded at Goldman Sachs on outlook for op. margins

Jazz Pharmaceuticals ( NASDAQ: JAZZ ) traded higher in the pre-market Friday after Goldman Sachs upgraded the Ireland-based biopharma to Buy from Neutral, citing a favorable outlook for its operating margin performance.

The upgrade comes weeks after Avadel Pharmaceuticals ( AVDL ) won a favorable court ruling in a patent dispute related to narcolepsy therapy Xyrem.

Arguing that Jazz ( JAZZ ) has performed in line with the management guidance, the analysts led by Madhu Kumar cite positive views on the company’s goal to reach 5% adjusted operating margin improvement by 2025, which it has already accomplished YTD.

“As such, we believe management will be able to maintain these operating margin improvements into 2025, even without substantial top-line growth from key franchises,” the team wrote.

On Jazz’s ( JAZZ ) largest revenue generator, the oxybate franchise, the analysts noted positive remarks on its near-term outlook given the prospects for oral therapy Xywav in neurologic sleep disorder idiopathic hypersomnia (IH).

“Specifically, while Xywav IH patient growth has moderated slightly, there is potential for volume to expand over the NT as more patients are diagnosed, providing a potential re-inflection point for the launch,” the analysts wrote.

However, citing several updates to its model, Goldman has slightly lowered the price target on Jazz ( JAZZ ) to $190 from $192 per share.

In August 2021, the U.S. Food and Drug Administration (FDA) expanded the label for Xywav to include adults with IH.

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