UPDATE: Piper Jaffray Upgrades Endo Health Solutions to Neutral, Raises PT as Paladin Transaction is a Game-Changer

In a report published Wednesday, Piper Jaffray analyst David Amsellem upgraded the rating on Endo Health Solutions ENDP from Underweight to Neutral, and raised the price target from $26.00 to $58.00. In the report, Piper Jaffray noted, “With Endo announcing its plans to acquire Paladin Labs for $1.6B in a mostly stock-based transaction, we are upgrading ENDP to a Neutral from an Underweight and raising our PT to $58 from $26. Beyond the EPS accretion, the potential for additional accretive M&A in the context of a tax-efficient structure (a 2014 pro forma tax rate of near 20% vs. 28% in 2013) should enable ENDP to sustain a more robust P/E in our view. Further, we believe the cost synergies and tax efficiencies point to far more visibility on a diluted EPS trough north of $4.00 even with multiple Lidoderm generics, further enabling a sustainable one-year forward P/E that is closer to the mid-teens average seen for ENDP's peer group. Our new PT is based on a P/E of 14x our 2015 pro forma EPS estimate of $4.35, discounted 0.5 years at 10%.” Endo Health Solutions closed on Tuesday at $56.22.