Time To Buy Lantheus, Credit Suisse Says

In a report published Monday, Credit Suisse analyst Matthew Keeler initiated coverage of Lantheus Holdings, Inc. LNTH with an Outperform rating and price target of $10. The analyst believes that the company is in the process of achieving a turnaround and that the stock valuation offers an attractive entry point at present.

"Lantheus is a diagnostic medical imaging agent player in the midst of a turnaround driven by new management, which has rectified past supply issues and improved sales force focus, resulting in a healthier top-line trajectory," Keeler explained.

The analyst expects the company to be able to achieve CC sales growth of 6.7 percent during 2015-2017, driven to a large extent by its key product, DEFINITY. In addition, debt reduction is expected to potentially drive more than 20 percent EPS growth in 2017.

DEFINITY is a contrast agent that helps increase the "readability of cardiac ultrasounds." With only about 4 percent of U.S. ultrasounds using contrast at present, there appears to be meaningful room for penetration for this product.

"Given our expectation for flattish growth in the rest of LNTH's marketed products and pipeline/geographic expansion a few years out, we see DEFINITY's growth trajectory as the key driver of LNTH's near-term health," Keeler added.

The analyst expects underlying U.S. ultrasound volumes to grow by 4 percent during 2015-2017, representing 100bps contrast penetration per year and 17 percent U.S. contrast sales growth during the same period.