In a report published Friday, Piper Jaffray & Co. downgraded its rating on Endo Health SolutionsENDP
from Overweight to Neutral, and lowered its price target from $37.00 to $28.00. Piper Jaffray noted, “We are downgrading Endo to a Neutral from an Overweight and lowering our price target to $28 from $37. Endo's tempered 2013 guidance reflects only limited Opana ER generic competition, and given the absence of FDA action on the legacy formulation, we believe there is considerable risk to the new diluted EPS range of $4.40 to $4.70. We estimate that 2014 EPS, factoring a major Opana ER erosion, would be close to $3.50. Though this implies a P/E of only 7.5x, a deeper EPS trough longer-term looks even more likely given the gradual but inexorable decline of Lidoderm. Given the uncertainty on Opana ER, not to mention underperformance of the AMS device business, we find it difficult to envision substantial value creation as 2013 progresses.” Endo Health Solutions closed on Thursday at $26.25.
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