UPDATE: Cantor Fitzgerald Downgrades Salix Pharmaceuticals on Fair Valuation
In a report published Monday, Cantor Fitzgerald analyst Irina Rivkind downgraded Salix Pharmaceuticals (NASDAQ: SLXP) from Buy to Hold, but raised the price target from $72.00 to $81.00.
In the report, Cantor Fitzgerald noted, “One of our favorite names is finally fairly valued. We are already giving the company risk-adjusted credit for Xifaxan IBSD, and now added risk-adjusted estimates for Relistor in chronic pain-related opioid-induced constipation (OIC), along with cost-assumptions associated with the company's entry into the primary care space. We also increased our outer year gross margin assumptions to account for the end of the Alfa-Wasserman manufacturing agreement in July 2014. These model changes resulted in a $9 price target increase from $72 to $81. There may be +7% upside remaining, but a downgrade of SLXP from BUY to HOLD is warranted, in our view. Our estimates exclude credit for next-gen Xifaxan for now. We see minimal downside risk to the stock, since (1) we are not expecting the FDA panel to request a large cardiovascular outcomes trial for Relistor; and (2) we think that management has the flexibility to raise Xifaxan Orphan pricing if the IBS-D program is terminated.”
Salix Pharmaceuticals closed on Friday at $75.54.
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