Our Stock of the Week is Lantheus Holdings, Inc. (LNTH). LNTH is a radiopharmaceutical company that develops, manufactures, and sells diagnostic and therapeutic products for nuclear medicine and diagnostic imaging. Their products help healthcare professionals with patient management and outcomes and can help clinicians detect cardiovascular disease. Lantheus also has expertise in artificial intelligence (AI) solutions.
LNTH's key product is Pylarify, which is a radiotracer that is used to evaluate lesions in men with prostate cancer. The market for this product is anticipated to exceed $3 billion by 2031, and LNTH had revenue of about $260 million from it in the first quarter of 2024.
There have been some concerns that cheaper competition would hurt LNTH, but on July 10, the Centers for Medicare & Medicaid Services (CMS), which covers nearly 20% of Americans, proposed new guidelines "to improve the accuracy of the overall payment amounts by paying separately for any diagnostic radiopharmaceutical with a per-day cost greater than $630 and removing their costs from the payment amounts for the nuclear medicine tests." These changes are set to take place on January 1, 2025. This change makes it more beneficial for physicians to prescribe high-cost radiopharmaceuticals and results in greater adoption of these diagnostic tools.
LNTH will report earnings on Wednesday morning prior to the market open. We typically do not want to hold large positions in events like earnings, but in this case, the technical setup combined with a big jump in forward guidance offers an interesting opportunity.
There are eight analysts who follow the stock, and all eight have 'buy' recommendations. The lowest target price is $127, and the highest is $165, with an average of $142.63. The stock is currently trading around $112.80.
On average, analysts have boosted 2025 estimates to $7.57 from $6.31, but the company has not yet updated guidance and will do so during its upcoming earnings report. The company has exceeded earnings estimates for nine straight quarters and is likely to do so again.
Analysts have also commented that the stock is 'an attractive acquisition target.'
There are a number of other interesting developments in the pipeline, and the recent acquisition of an imaging agent for Alzheimer's Disease has interesting potential.
Technically, the stock has been consolidating the big gain on the Medicare decision and has slowly been pulling back as it looks for support. It is very risky to hold into earnings, but we are looking to aggressively trade the volatility after the news. There is a good chance that recent highs will be tested. As always, we will not chase the stock on Monday morning but will aggressively trade price movement.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and buy or sell anytime for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in LNTH.. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
