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Bull of the Day: Lantheus (LNTH)

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Lantheus (LNTH - Free Report) is a $5 billion provider of medical imaging technologies (think nuclear agents) for the diagnosis of cardiovascular and other diseases. But their new blockbuster application is in prostate cancer detection.

Here's how the company, which was just added to the S&P 400 Midcap Index in October, describes their business...

We are an established leader in the development, manufacture and commercialization of pioneering diagnostic and therapeutic products and artificial intelligence (AI) solutions. Our broad portfolio features:

**Precision Diagnostics that Find and Follow diseases in non-oncologic conditions
**Radiopharmaceutical Oncology diagnostic and therapeutic products that Find, Fight and Follow cancer
**Strategic Partnerships that empower precision medicine through the use of biomarkers, digital solutions and radiotherapeutic platforms

PYLARIFY® (piflufolastat F 18) injection (also known as 18F-DCFPyL or PyL) is a fluorinated small molecule PSMA-targeted PET imaging agent that enables visualization of lymph nodes, bone and soft tissue metastases to determine the presence or absence of recurrent and/or metastatic prostate cancer.

And here's how they describe the benefits for doctors in diagnosing their patients...

For men with prostate cancer, PYLARIFY combines the accuracy of PET imaging, the precision of PSMA targeting and the clarity of an F 18 radioisotope. This combination brings superior diagnostic performance in assessing patients with suspected metastasis for initial definitive therapy or suspected recurrence based on elevated PSA, allowing you to better assess your patients’ disease status.

Investor Extremes from Q3 to Q4 Results

Lantheus shares have been on a wild ride since October. After the company's Q3 earnings report in early November, here's what I wrote to my Healthcare Innovators members...

The Lantheus Protocol: Pylarify Growth May Slow

The outlook from management for Pylarify growth was not what analysts -- who are are modeling this product out 2-3 years -- were expecting. But most see the next two quarters as a temporary blip in a longer-term blockbuster trajectory.

One of the biggest issues was new competition that I, nor most analysts, didn't see coming. This quarter saw another PSMA (prostate cancer imaging) imaging agent hit the market in earnest: Telix's Illuccix recorded sales of $36.4M in the U.S, with 13% of market penetration.

The reaction was a plummet in LNTH shares from $70 to $55 in three days.

But a few analysts, including those from SVB Leerink and Truist. Here were the headlines I included in my November reports...

SVB Leerink: Pylarify Drives Another Beat & Raise Quarter; We See More Room for Growth

Truist Securities: 3Q Beat & Raise w/ EPS Ramp Still Underappreciated; Sell-Off Overdone In Our View; Buy The Weakness

Flash Forward to Q4 and a 20% Rally

Lantheus delivered a BIG and welcome beat-and-raise quarter and shares were up as much as +20%, poking their nose over $71.

Lantheus Holdings on Thursday reported Q4 adjusted net income of $1.37 per diluted share, up from $0.25 a year earlier. Analysts expected $0.96.

This quarterly report represents an earnings surprise of 42.71%. A quarter ago, it was expected that this diagnostic imaging company would post earnings of $0.83 per share when it actually produced earnings of $0.99, delivering a surprise of 19.28%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Lantheus Holdings, which belongs to the Zacks Medical - Products industry, posted revenues of $263.17 million for the quarter ended December 2022, surpassing the Zacks Consensus Estimate by 7.59%. This compares to year-ago revenues of $129.56 million. The company has topped consensus revenue estimates four times over the last four quarters.

For guidance, the company said it anticipates adjusted diluted EPS of $1.28 to $1.32 on revenue of $280 million to $285 million for Q1. Analyst consensus calls for adjusted EPS of $1.06 on revenue of $256.5 million.

Full 2023 adjusted diluted EPS is expected to range from $4.95 to $5.10, and revenue for the year is estimated to be $1.14 billion to $1.16 billion. Analysts were only projecting adjusted EPS of $4.22 on revenue of $1.04 billion.

Since Lantheus expects FY23 revenue in the range of $1.14B to $1.16B (consensus $1.04B) and the company anticipates FY23 adjusted EPS between $4.95 and $5.10 (consensus $4.22), analysts have obviously been scrambling to raise their estimates, thus moving LNTH into the Zacks #1 Rank tier.

Given this tremendous beat-and-raise, it's ridiculous the stock got trashed down below $50. But that's the game of Wall Street.

Among several bullish analyst reactions was this one...

Lantheus price target raised to $115 from $105 at Mizuho: Analyst Anthony Petrone raised the firm's price target on Lantheus to $115 from $105 and keeps a Buy rating on the shares. The strong Q4 print was supplemented by an "overly robust" initial 2023 outlook, and Petrone sees "substantial share upside as Pylarify accelerates and the portfolio matures."

Bottom line: Keep LNTH on your radar and always buy between $55 and $65.

Disclosure: I own LNTH shares for the Zacks Healthcare Innovators  portfolio.


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