Roth Capital Defends Flamel Tech Selloff, Says It's 'Overdone' And Worth $21 Per Share
- In a report issued Thursday, Roth Capital analyst Scott R. Henry shared a look into Flamel Technologies S.A. (ADR) (NASDAQ: FLML), and the increasing competition its Bloxiverz faces -– and will continue to face.
- After taking this into account, the expert decided to reiterate a Buy rating and $21.00 price target on the stock, arguing that the shares appear to already be pricing in the increased competition.
West-Ward recently received approval for a product that competes with Flamel’s Bloxiverz, six months ahead of expectations. Roth estimates (preliminarily) that the impact of this event stands around a ~$35-$40 million negative adjustment to 2016 targeted revenues, and a ~$0.40 reduction in EPS.
However, the firm does not see its 2017 numbers changing.
With shares apparently pricing in this event already and down double-digits on Thursday, the analysts decided to reiterate a Buy rating on the stock.
Analyzing The Impact Of A Neostigmine Competitor
Analysts at Roth anticipate that Bloxiverz’s market share will fall relatively quick, from 55 percent to around 33 percent. The experts assume that contracted pricing could tumble around 20 percent, from roughly $50 to $40.
“These adjustments indicate that our 2016 Bloxiverz revenue target could be reduced towards $80M from the current forecast of $117M. This should have a minimal impact on outer years,” the report added.
Preliminarily, the aforementioned revenue adjustments could bring the firm’s
2016 EPS forecast down towards $0.60 (from $1.00). However, no impact should be seen in the EPS targets for 2017 and beyond, the note concluded.
An Overdone Selloff
From a cash-flow perspective, the 1X reductions trim Flamel’s valuation by ~$0.50 per share. However, the stock lost about $2; the firm’s initial impression is that the reaction was “overdone.”
Shares of Flamel were trading down more than 14 percent on the last day of 2015.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
Latest Ratings for FLML
|Mar 2016||JMP Securities||Maintains||Market Outperform|
|Jun 2015||Leerink Swann||Maintains||Outperform|
|Dec 2014||Roth Capital||Maintains||Buy|
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