The Medicines Company Surges Amid Credit Suisse Upgrade

Credit Suisse upgraded The Medicines Company MDCO Thursday from Neutral to Outperform and raised its price target from $27 to $33.

Analysts led by Jason Kantor noted that “investor sentiment is currently very bearish and several factors could significantly improve the outlook for MDCO in 2015. The most important is a potential settlement with Hospira or win on appeal.”

The firm increased its “valuation for Angiomax, carbavance, cangrelor, and the deeper pipeline. Upside to probability adjusted sum of the parts could come from settlement with Hospira, increased probability of winning on appeal, or positive regulatory decisions on pipeline programs including cangrelor.”

Kantor noted “product launches in 2014/2015 include Orbactiv, Minocin, Preveleak, Raplixa, Ionsys, and potentially cangrelor. Together, these products will help replace revenue that will be lost when Angiomax faces generic competition.”

The analyst report concluded that near-term gross margins will increase as the “23 percent royalty to BIIB expires Dec. 15, 2014. The total impact of this change will largely depend on the subsequent period of exclusivity (mid-2015, mid-2019, or something in between). The improved margins incentivize MDCO to settle with Hospira.”

The Medicines Company recently traded at $26.17, up 4.6 percent.