In a research report released Monday, Oppenheimer analyst Derek Archila reiterated a Perform rating on shares of Endo International plc (NASDAQ:ENDP), while estimating fair value of $12-$14 per share. The analyst explained why the stock could remain range-bound in the near to medium term. (To watch Archila’s track record, click here)
Archila wrote, “Our recent analysis of ENDP’s additional unfunded mesh liability and discussion with a legal expert familiar with mass tort/product liability defense ligation supports our view ENDP will remain highly levered (in the 4s) and the company’s turnaround will take several years. While we view any of our potential settlement scenarios for the company’s additional unfunded mesh liability to be manageable, we believe continued pricing pressure in ENDP’s US generics base business, need for additional advertising and promotion spend to support Xiaflex growth and inability to grow through meaningful acquisitions leave ENDP little room for error.”
“Ultimately our estimated mesh liability for ENDP’s additional claims would represent a negative ~$1-2/share impact on our DCF […] We believe shares will remain range-bound until we see the generic pricing environment improve and progress on de-levering its balance sheet.”
Out of the 13 analysts polled in the past 3 months, 3 are bullish on ENDO stock, while 10 remain sidelined. With a return potential of 26%, the stock’s consensus target price stands at $14.64.