Sterne Agee Sees Entry Point In Endo International PLC Shares

Sterne Agee issued a report on Endo International PLC ENDP Tuesday and suggested that "recent weakness" created a "good entry point." The firm maintained a Buy rating and $75 price target.

Analysts Shibani Malhotra and Austin Nelson noted that "Endo has agreed to acquire Auxilium Pharmaceuticals for $33.25 per share ($2.6 billion) in a cash and equity deal. Endo expects to generate synergies of $175million making the deal immediately accretive."

Malhotra commented that Endo "shares have been weak, mostly on unwarranted confusion around management’s guidance regarding Auxilum’s standalone top-line growth and the impact of the deal structure on potential accretion."

The report concluded that "Endo remains one of our top spec pharma picks and we recommend building positions at these levels."

Malhota also mentioned that Endo management indicated "that longer term the company can achieve additional tax synergies as Auxilium is a full US tax payer, which could provide upside to our out year accretion estimates. We estimate that each $10 million in incremental synergies adds $0.04 (0.9-0.94 percent) to 2016 EPS assuming 50-75 percent of equity issuance, respectively."

Endo International PLC recently traded at $61.05, down 0.25 percent.