More Pros Than Cons Investing In Impax Right Now

A Reuters article, published on March 7 suggested that Impax Laboratories Inc IPXL hired an investment bank to help it explore strategic options, which could include an acquisition or sale of the company. “We believe patient investors could be rewarded if business trends improve, or if strategic options (such as a sale) are pursued,” Deutsche Bank’s Gregg Gilbert said in a report.

Gilbert upgraded the rating on Impax to Buy, while mentioning that the price target of $11 “supports material upside” both for stand-alone execution and a potential M&A scenario.

A Look Into 2017

When reporting its fourth-quarter 2016 results, Impax Laboratories Inc did not provide 2017 guidance, but indicated that its generic business may decline and its brand business may grow. Following the quarter, the 2017 estimates had been significantly reduced, and these are now “hopefully de-risked,” Gilbert stated.

The revenue and EBITDA estimates for 2017 had been reduced from $924 million to $800 million and from $204 million to $134 million, respectively. “It is important to note the potential for upside to our estimates and DCF-derived target from key pipeline assets, including gConcerta, gRenvela, and gWelchol, which could be significant contributors for the company,” the analyst wrote.

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