Medivation Execs Making A Strong Case For Independent Growth Vs. Sale, Credit Suisse Says
Medivation Inc (NASDAQ: MDVN) reported its 1Q16 US/EU Xtandi sales and non-GAAP EPS short of expectations. Credit Suisse’s Kennen MacKay maintained an Outperform rating for the company, with a price target of $63.
Medivation posted Q1 US Xtandi sales at $307.6M and EU sales at $240M. Non-GAAP EPS came in at $0.11, significantly short of the CS estimate of $0.23 and Street expectation of $0.22. Management offered “a convincing value proposition for remaining independent,” analyst Kennen MacKay noted.
Management Takes A Stand
For the first time, the company announced 2020 revenue targets of more than $2.5Bn, representing a CAGR of 29 percent for 2015-2019. This is substantially higher than the CS estimate of $1.9Bn and Street expectation of $1.8Bn.
“Mgmt. made a clear argument for pipeline market opportunities (>$18.5Bn for Xtandi; >$30Bn for talazoparib; >$5Bn for pidilizumab), though we anticipate investors will heavily discount pipeline for development time and risk,” MacKay wrote. He added that some investors could become sellers at a higher offer price.
Long Term Upside
The analyst commented that Medivation was a long-term growth story, with upside from Xtandi in pre-metastatic prostate cancer, wholly owned pipeline assets talazoparib and pidilizumab. He added that the $52.50 per share offer from Sanofi SA (ADR) (NYSE: SNY) has “significantly undervaluing MDVN’s pipeline,” while added that the company’s 2020 revenue targets “reinforce our bullish stance on independent operations of the company.”
Latest Ratings for MDVN
|Sep 2016||SunTrust Robinson Humphrey||Terminates||Neutral|
|Aug 2016||BMO Capital||Maintains||Market Perform|
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