Roth Capital Upgrades ANI Pharmaceuticals To Buy On Valuation

• On Monday, Roth Capital upgraded shares of ANI Pharmaceuticals Inc ANIP from Neutral to Buy.
• After last week’s ~25 percent decline in the stock price, the experts find the valuation compelling once again.
• Shares of ANI Pharmaceuticals continue to fall on Monday trading.

In a report issued Monday, analyst Scott R. Henry shares a few reasons to revalue the shares, for which he now has a $60.00 price target, which implies an upside of almost 50 percent. Among them, investors can count the further pipeline expansion coming from corticotropin, market share gains for EEMT, and a “stabilization of current negative sentiment.”

In the analyst’s opinion, the current valuation does not appropriately reflect ANI’s “sound fundamentals.” While some risks associated with the EEMT franchise remain, the firm thinks the risk profile is acceptable at current stock prices -- below $50 a share.

Let’s get back to the reasons for the upgrade.

1)   The anti-drug pricing sentiment triggered by Hillary Clinton’s remarks drove the stock price down, creating a buying opportunity for long-term investors.

1)   ANI paid Merck & Co., Inc. MRK roughly $75 million for “an approved NDA for corticoptropin (similar to Acthar Gel from Mallinckrodt - for the treatment of multiple sclerosis, rheumatic disorders, dermatologic diseases, and other ailments).” The firm estimates that the compound has a yearly revenue potential of ~$200 million. Management targets to launch it in the second half of 2017. “Key assumptions include a ~$1 billion market, ~25% share, and a ~25% discount to the brand. This pipeline compound creates significant upside tail outcomes for ANIP shareholders,” the report assures.

2)   The EEMT franchise is strengthening.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.