UPDATE: Citigroup Initiates Jazz Pharmaceuticals at Buy; Expecting Settlement to Remove Overhang

Citigroup initiated coverage on Jazz Pharmaceuticals

with a Buy rating and a $70 price target. Citigroup commented, "We see a high probability (~≥75%) of either a settlement or win for JAZZ around the ongoing litigation with Roxane over narcolepsy drug Xyrem. While we believe JAZZ currently has the upper hand to win the suit, a settlement would be strategic for both parties and either outcome would lift the overhang for JAZZ's valuation. A loss for JAZZ could push its valuation as far down as the low $30's, but we are establishing a $70 TP assuming a favorable outcome for JAZZ (settlement or win) and view the most probable settlement window from late Dec. `12 - Jun `13." Jazz Pharmaceuticals closed at $51.85 on Monday.