UPDATE: Morgan Stanley Initiates Alkermes at Equal-Weight on Commercialization Visibility

Morgan Stanley initiated coverage on Alkermes

with an Equal-weight rating and a $21 price target. Morgan Stanley commented, "We have high regard for management, and see pipeline drug 5461 (depression) as intriguing. But we are cautious on commercialization prospects for 9070 (schizophrenia), and believe the stock valuation appropriately discounts growth outlook … ALKS trades at EV/EBITDA of 21x F13E and 15x F16E (we are focused on F16 because key launches are expected by then). We project 8-yr CAGR (F13-F21E) revenue growth of 6% and EPS growth of 13%. Note ALKS's low tax rate (est. mid-teens long-term) helps justify above average EBITDA multiple." Alkermes closed at $19.97 on Monday.