Eagle Pharma Has 'Several Upcoming Catalysts' And Is A Buy, RBC Says

Shares of Eagle Pharmaceuticals Inc EGRX continue to rise on Monday, as they have been doing since the beginning of the year. In this context, RBC Capital Markets analysts Randall Stanicky and James C Chen initiated coverage on the stock with an Outperform rating and a $97.00 price target.

The experts recognize the intimidating power of the huge year-to-date stock price move. However, they believe “the value is real and there are several scenarios that can unlock more value.”

According to the research note, Bendamustine is key and is responsible for 54 percent of the equity value. However, RBC Capital Markets analysts also think there’s upside optionality. “While the stock is +442% YTD on the back of the Teva Pharmaceutical Industries Ltd (ADR) TEVA deal, we believe the contract terms leave upside scenarios for EGRX that could potentially deliver more over time,” they explain.

The experts also highlight the robustness of the company’s pipeline of additional opportunities, which they believe can help to support a maintainable growth story. The main near-term opportunity, they say, is EP-6101, an improved version of The Medicines Company MDCO’s Angiomax. Furthermore, Stanicky and Chen think expectations are for Ryanodex for exertional heat stroke (EHS) are generally low. However, this product is expected to be approved by mid-2017 and would be a first-to-market orphan drug.

Finally, the analysts see plenty of potential/a catalyst in expected near-term M&A activity on its sizable cash balance – “$116 million in cash, no debt, and an EBITDA base that beginning in 2016E will add further to cash and provide a base

from which to lever up further.”