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A Fairly Balanced Risk And Reward Scenario For Lannett; Deutsche Bank Initiates At Hold

A Fairly Balanced Risk And Reward Scenario For Lannett; Deutsche Bank Initiates At Hold
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Lannett Company, Inc. (NYSE: LCI) has a fairly balanced risk and reward scenario for the future; therefore, Deutsche Bank's Gregg Gilbert initiated Lannett at Hold and set a price target of $26.

The small-cap player in the U.S. generics market had strong revenue and growth over the past few years, which "was driven in large part by strategic price increases, and the acquisition of Kremers Urban Pharmaceuticals," Gilbert noted.

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Lannett has a good sized generic drug pipeline to foster more growth, but in the United States, the tailwind from price growth has slowed and competitive pressures have intensified.

Lannett has a higher product concentration than its peers. Levothyroxine and Ursodiol "account for approximately one-third of sales and a higher portion of profits," Gilbert stated. While Levothyroxine has a pretty strong hold on its market, Ursodiol could face greater competition from generics at any time. The lack of geographic diversity also negatively impacts Lannett's drug portfolio.

In Gilbert's view, rising competition in the generics market will muffle any positive growth Lannett is able to muster.

At time of writing, Lannett was down 0.80 percent on the day at $23.56.

Latest Ratings for LCI

Feb 2018BMO CapitalMaintainsMarket PerformMarket Perform
Jan 2018Goldman SachsInitiates Coverage OnNeutral
Nov 2017BMO CapitalMaintainsMarket Perform

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