Goldman Sachs’ Specialty Pharma Playlist (MYL, AGN, PRGO)

Goldman Sachs is out with a research report this morning, where it updates its specialty pharma catalyst calendar, as well as their top ideas amidst continued healthcare sector volatility and what appears to us to be a high level of interest around where to position within the broader sector as we head towards what will likely be a post-Labor Day pick-up in activity. 1. Buy Mylan Inc.

: the GS analysts believe that the stock is a good play for the back half of 2010 given that Q3 P&L improvement could lend credibility to what they see as an “achievable $2.00 EPS target in 2011 (above both us and consensus) and our three-year 18% EPS CAGR.” “At 8.7X our 2011E EPS, investor sentiment remains negative with shares approaching the late 2008 NTM trough levels (about 7X), which we do not view as reflective of recent P&L drivers including (1) generic approvals of Catapres and Wellbutrin XL; (2) accretive acquisition of Bioniche (injectibles); (3) more limited EU impact than many anticipated where we expect additional color at the upcoming Global Generic Strategy Summit in Europe in early September which we will be attending.” 2. Buy Allergan Inc.

: the GS analysts believe that a late October approval of Botox for migraine use will pop the shares, as well as continued takeover speculation in the name. they added that they see AGN’s guidance as conservative, which could prove to support shares if sales do come in slightly. “We remain above consensus with a 17% (un-risk adjusted) three-year EPS CAGR reflecting a PEG of roughly 1X and well below historical levels.” 3. Sell Perrigo Co.

: the GS analysts believe that manufacturing risk and P&L risk continue to keep them negative on the name, with a 12-month price target of $50.00. at 15.5x 2011 adjusted earnings, they see it as overvalued as well. “We look for an update on both core business trends and manufacturing remediation with fiscal 1Q, which we expect will be reported the week of November 1.”