Our Stock of the Week Lantheus Holdings, Inc. (LNTH). Lantheus develops, manufactures, and commercializes diagnostic and therapeutic products that assist clinicians in the diagnosis and treatment of heart, cancer, and other diseases worldwide. It has a variety of products such as Definity, which is a microbubble ultrasound enhancing agent used in ultrasound exams of the heart; TechneLite, a technetium generator for nuclear medicine; Xenon-133 to assess pulmonary function; Neurolite to identify the area within the brain where blood flow has been blocked or reduced due to stroke as well as numerous other products.
LNTH is a rare value play in the biotechnology sector. There was concern about the stock when the CEO left, and the results for its prostate cancer product were not as strong as hoped, but the company posted strong fourth-quarter earnings and increased guidance.
The stock is trading with a PE of just ten and has consistently reported stronger-than-expected earnings. There are eight buy ratings on the stock and one hold. The average target price is $98.25, which is a 52% increase from current levels. The high target is $128 from Jones Trading.
Following fourth-quarter earnings, the analyst from Truist stated that the company’s stock does not reflect the appropriate value for Pylarify and the “core” business that is worth at least $78 per share, Lantheus out-year EPS power also “remains underappreciated.”
Unfortunately, the chart is a mess with a couple of large gaps and no clear support. We view LNTH as a stock that we will slowly accumulate on pullbacks toward the 50-day simple moving average around $58. Once we see better technical action, we will add it to the position.
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