UPDATE: Aegis Capital Initiates Coverage on Cubist Pharmaceuticals with Hold Rating, $45 PT on Cubicin Success

In a report published Wednesday, Aegis Capital initiated coverage on Cubist Pharmaceuticals

with a Hold rating and $45.00 price target. Aegis Capital noted, “We are initiating coverage on Cubist Pharmaceuticals, Inc. with a Hold rating and a 12-month price target of $45.00 per share. In our view, Cubist is one of the most significant success stories of the specialty pharmaceuticals sector, which we refer to as ‘the distance runner' because of the way in which the company has built itself around the strength of its flagship drug, Cubicin (daptomycin). Since its launch in 2003, Cubicin has averaged a >30% year-on-year CAGR on its trajectory towards becoming a blockbuster drug (>$1 bn in 2013 total projected sales). However, at this juncture we believe that Cubist needs to add one or two more late-stage assets to its pipeline that would provide the revenue diversification that the firm needs in order to become more interesting to investors and to provide long-term revenue and earnings growth potential. Accordingly, we are initiating coverage with a Hold rating pending further strategic initiatives that utilize the strength of Cubist's balance sheet, which currently holds ~$980mm in cash and approximately $400mm in long-term convertible debt.” Cubist Pharmaceuticals closed on Tuesday at $43.72.