Jazz Pharmaceuticals (JAZZ) is tracking well for a meaningful expansion opportunity for its Ziihera beyond biliary tract cancer into gastroesophageal adenocarcinoma, Morgan Stanley said in a note Sunday.

Analysts at Morgan Stanley added that the balance sheet strategy and business development execution is critical to support the terminal value.

Jazz is expected to present its third quarter revenues early November, and according to Morgan Stanley, they are slightly below on neuroscience product revenues, but slightly above on oncology revenues and in line on net product revenues.

Morgan Stanley added that they have increasing confidence in a positive topline for the third quarter.

"Given the potential for longer and durable responses, we believe our 7 month duration of treatment is overly conservative," the analysts said, noting that they are raising their duration of therapy in GEA to 12 months, from 7 months prior, as data suggest many patients are likely to be on therapy for well over 1 year, which likely represent further upside to their estimates.

Analysts at Morgan Stanley noted that with a likely upside surprise in oncology pipeline revenues and modest revision higher, they are overweight on Jazz Pharmaceuticals with a price target of $180 per share, up from its earlier projection of $167 per share.