2 Biotech Stocks Deutsche Bank Just Initiated

Shares Sagent Pharmaceuticals Inc

and Impax Laboratories Inc

are up on Wednesday morning, after analysts at Deutsche Bank initiated coverage on Tuesday. However, the former is considerably up, as the research firm rated it with a Buy, while the latter is just slightly up, responding to a Hold rating.

The analysts initiated coverage of Sagent with a Buy rating and a $29 price target. They say they have always liked the biotech company's "focus on the attractive generic injectables segment but now believe the recent weakness in the shares creates a favorable risk/reward." While the firm sees the sudden departure of CEO and Founder Jeff Yordon as a source of uncertainty, they believe "the operating team can manage the business, deliver on its targets, and create value over time." In the meantime –the say, during the management transition, they would not be surprised to see the Board pursue options in light of the company's underperformance when compared to its peers in recent years, stock ownership concentration, and the scarcity value of injectables assets.

Unlike Sagent, Impax was initiated at Hold, with a $50 price target. The analysts say the biotech company has made "significant progress with addressing its manufacturing issues, which have been an overhang for the stock since 2011 and could be resolved this year." Deutsche Bank highlights that they like Impax's recent acquisitions, which contributed to the diversification of the revenue base, added two products with considerable growth potential to the portfolio, expanded the generics pipeline, and strengthened the manufacturing base. Having said that, the stock's year-to-date appreciation, which surpasses 50 percent, has probably priced in the success. The analysts think that "significant upside from here could require stronger uptake for Rytary, greater new generic flow (some of which may be tied to resolution of the Hayward issues), and business development activity (which was predicted by management)."