Despite shares of United Therapeutics Corporation UTHR being a consistent sell-side short amid mounting risks, a Credit Suisse analyst sees a buying opportunity.
The risks facing United Therapeutics include a majority of the top line facing generics in 2018 and management's preference for share repurchases over external investments to diversify the core business, Auster said in a Tuesday note.
A worst-case revenue outcome combined with long-term inefficient spending would be needed to drive substantial downside from current levels, the analyst said.
Credit Suisse's base case assumption calls for revenue to decline from $1.7 billion in 2017 to $740 million by 2026, dragged by generic competition to the pulmonary arterial hypertension treatment Remodulin. Individual safety report approval that's expected in July could help Remodulin preserve 15-20 percent market share, Auster said.
Limited downside exists for the shares beneath the $95 level, the analyst said.
"Our assumption is that downside risk below our efficient downside revenue case is likely to be limited and short-lived, as market forces should pressure the status quo and lead to strategic changes, M&A, or even attract shareholder activism at lower share prices."
The Price Action
United Therapeutics shares were down about 21 percent over the past year through Monday.
The stock was up 7.77 percent at the close Tuesday at $115.77.
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