Jefferies Upgrades Aegerion Pharma To Buy, Sees Positively Skewed Risk/Reward

In a report published Tuesday, Jefferies analyst Eun K. Yang upgraded the rating on Aegerion Pharmaceuticals, Inc. AEGR from Hold to Buy, while maintaining the price target at $26. The analyst believes that the risk/reward is positively skewed at present.

"Notwithstanding uncertainties on timing of new CEO hire and potential impact from PCSK9 inhibitors on Juxtapid, we view negative sentiment/concern is largely priced in," Yang elaborated, while adding that the risk/reward would be even more positively skewed "if PCSK9 inhibitor impact turns out to be less than feared."

Aegerion Pharmaceuticals reported its preliminary sales figure for 2Q15 ahead of the estimates and the consensus. The company also announced on Monday that CEO Marc Beer and COO Craig Fraser had resigned.

According to the Jefferies report, "This is not surprising as it's been widely viewed as forthcoming given the disappointing Juxtapid sales leading to massive stock under-performance in 2014. Thus, this is regarded as a welcome change and may be a necessary step for the company. While difficult to predict, AEGR expects a new CEO hire could take 3-6 months."

The analyst believes that the change in the top management could potentially restore investor confidence in the stock. Concerns regarding competition from the launch of Repatha by Amgen, Inc. AMGN in 3Q15 are also priced into the stock, given its year-to-date underperformance despite Juxtapid exceeding the sales expectations for 1H15.