Credit Suisse Impressed By Lantheus Holdings' Market Leadership, But Wary Of Increasing Competition

Credit Suisse assumed coverage of
Lantheus Holdings Inc LNTH
with a Neutral rating and $8 price target, as it is wary of heightened competition despite acknowledging the company's market leadership in DEFINITY/Xenon franchises, strong industry fundamentals and pipeline opportunities.


DEFINITY, an injectable ultrasound contrast imaging agent used in echocardiography, has 80 percent share of contrast echocardiography market in United States and accounts for 41 percent of company sales. However, the brokerage expects DEFINITY to lose some share over time with the entry of competitor Bracco's (Lumason) into the market earlier this year.


The company's other key product Xenon, a radiopharmaceutical gas used to assess pulmonary functions, also faces competition from a player who "re-entered the market earlier this year."

The brokerage expects "essentially flat" revenues in 2016, with growth in DEFINITY product offset by declines in Xenon on increased competition and slowness in noncore product lines.

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"DEFINITY should benefit from rising demand across the ultrasound contrast agent market globally, growing at an estimated 30 percent CAGR to $650 million by 2020, direct sales initiatives, and global expansion. However, we acknowledge the potential of a more challenging competitive landscape," analyst Erin Wilson wrote in a note.

Tailwinds Ahead?

Wilson said the upcoming catalysts include an update on potential F-18 partnerships and pending trials by its China partner for DEFINITY, as well as updates on competitive positioning within key markets.

That said, the analyst cut his 2016 EPS view to $0.60 from $0.73 and 2017 EPS estimate to $0.78 from $0.87 to reflect increasing competition near term and adjustments to one-time items.

Shares of Lantheus were down 2.98 percent on Friday, trading at $8.80.

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Posted In: Credit SuisseDEFINITYErin WilsonXenonAnalyst ColorNewsHealth CarePrice TargetInitiationReiterationAnalyst RatingsMoversTechGeneral