Updates: HRMY, MELI, SWAV

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Another day, another slew of quarterly update reports for our followed stocks. Today we will take a brief look at 3 more, for Harmony Biosciences, Mercadolibre, and Shockwave Medical. Let’s go!


Harmony Biosciences (HRMY)

I expected Harmony to be a volatile ride when recommended, but the stock has traded in a tight range for almost 6 months now (absent one "gap-and-fill" in October). For the 4th quarter, Wakix revenue was up 31%, continuing its strong performance years after launch. With just over 6,000 patients in a narcolepsy population of 80,000, there is still plenty of growth potential in its primary indication. Harmony continues to pursue new indications too, for pediatric narcolepsy, Prader-Willi, and idiopathic hypersomnia, the last having troublesome Phase III trials that the company is meeting with the FDA about next month.

This quarter also included the Zynerba purchase, and predictably costs jumped some. We will keep an eye on this. The product acquired, Zygel for Fragile X syndrome, is still in phase 3 trials with data about a year away.

Impressively, Harmony bought back $100 million worth of shares last year, which is something you rarely see with small biotechs.

In all, I’m still happy with Harmony’s trajectory. The fair value gets a small bump up to $60 from a previous $56. It is one of the few stocks we follow that looks like a reasonable buy at present.


Mercadolibre (MELI)

Mercadolibre continues its push to dominance of the Latin American e-commerce and digital payments markets. It was another great quarter: revenues up 42%, items sold and shipped up 25%, and payment transactions ballooning 76%. Gross merchandise volume swelled 40%, and total payment volume was up 57%. The ads business grew sales 70%. These are numbers closer to what you see with a small start-up than a firm that has dominated its markets for 5+ years. Mercadolibre continues to hit on all cylinders.

Management exuded confidence that 2024 would be even better, as technology investments made over the past several years start to bear fruit. Notably, this company continues to crush my free cash margin targets (they came in at 32% this year, vs. my 20% expectation). Adjusting the model, even conservatively, leads to a meaningful bump in the fair value target to $1,984 (from $1,771). Despite a 70% run-up since we added it, Mercadolibre still trades on the edge of "buyable" right now.


Shockwave Medical (SWAV)

Shockwave, the company that makes sonic catheters for breaking up arterial plaque, delivered a good Q4 and fiscal year. Revenue was up 41% and 49% for the quarter and full year, respectively. One important development this quarter were new codes granted the firm’s treatments that increase reimbursements by a massive $4,000-10,000. That could lead to a bump in demand, as more doctors elect for IVL instead of the more traditional, less effective, but cheaper angioplasty-based treatments.

Not a whole lot more to comment on here, the firm closed the Neovasc deal but it isn’t contributing much quite yet. Based off of guidance and management’s commentary, I’ve made several changes to the valuation model but the fair value price doesn’t move much. It gets a slight increase to $213 (from $208).


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