Deutsche Bank resumed coverage of Shire PLC SHPG Tuesday with a Buy rating and $220 price target.
“Despite the distractions of the merger process with AbbVie ABBV, the company continues to perform well: better-than-expected 2Q results led to a FY guidance upgrade (to low/mid 30 percent EPS growth) and last night's press release confirmed that trading has "remained strong" since the end of 2Q,” according to Analyst Mark Clark.
The report noted that Shire will receive this year an additional “$2bn cash ‘windfall’ from a combination of the AbbVie break fee and a Canadian tax settlement.”
Clark believed “the company’s pipeline could deliver non-risk-adjusted revenues of >$4bn pa, equivalent to 70 percent on top of the current sales base.” He also expected Shire to “deliver double-digit EPS growth over the medium/long term (EPS CAGR 2013-18E: 17 percent).”
The price target was “derived by applying a 20x PE (unchanged) to 2015E non-GAAP EPS. This PE is arrived at by comparison with a group of fast-growing mid-cap pharma companies and reflects our confidence in the sustainability of growth.”
Shire PLC recently traded at $185.74, up 0.62 percent.
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