The Indivior share price soars to 3-year highs! Here’s what I’m doing now

The Indivior share price has jumped after the UK healthcare share hiked its full-year forecasts. Is now the time to buy the FTSE 250 firm?

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The Indivior (LSE: INDV) share price was one of the best performers in Wednesday business. The UK healthcare share — which makes medicines to help people tackle addiction and mental health problems — rocketed 6.4% 154.6p per share. It had touched its most expensive since November 2018, above 160p earlier in the session.

Indivior said that “increasing business momentum” had encouraged it to raise its full-year forecasts. The FTSE 250 company now expects net revenues to range between $705m and $740m in 2021. This is up significantly from its prior revenues estimate of up to $625m.

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Indivior increases forecasts

The healthcare giant reckons net revenues of its opioid dependence battler Sublocade will come in at between $210m and $230m this year. This us better than the previous estimate of $185m-$210m and reflects “stronger demand and a large order from a new criminal justice system customer.”

Indivior also thinks market share erosion for its Suboxone Film will be less pronounced than it had previously been expecting. The UK share kept its net revenues forecast for Perseris anti-psychosis drug unchanged at $17m-$20m.

More upgrades

The UK pharma share also predicted that adjusted gross margin would clock in “in the low-80%s range.” This is modestly better than prior expectations thanks to better commercial sales of Suboxone Film.

Adjusted operating expenses should come in between $470m and $480m in 2020. It said this reflected incremental performance-based expenses and updated foreign exchange impacts, on top of incremental discretionary long-acting injectable (LAI) growth investments of up to $25m. Indivior had previously tipped operating expenses of $420m-$440m.

Still, those revenues and margin upgrades prompted Indivior to predict that “a significantly higher level of positive adjusted pre-tax income than previously [is] expected.”

A terrific buy?

Allegations of product mis-selling have dogged Indivior in recent years. But news flow during the past 12 months suggests the FTSE 250 firm has finally turned the corner. It signed a $600m settlement with the US Department of Justice last July over allegations that it illicitly boosted prescriptions of Suboxone. And, more recently, it batted away a $1.4bn claim from Reckitt and settled for a far-more modest $50m.

Like any pharma maker, Indivior is always in danger of expensive R&D failures that can leave a hole in profits forecasts. But there’s a lot I like about this particular UK share. Its products are essential in tackling the ballooning opioid crisis in North America.

It has also just announced steps to enter the cannabis addiction market. This is a potentially-colossal market as the drug becomes increasingly popular in the treatment of mental and physical health conditions.

Despite recent share price strength, Indivior shares still look cheap. The business trades on a rock-bottom, sub-1 price to earnings growth (PEG) ratio of 0.6. At these prices, I’m seriously thinking about adding the UK share to my own stocks portfolio.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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