MLV Initiates Hold on Intercept Pharmaceuticals Inc; Sees 8% Downside for the Stock


In a research report published after market close today, MLV & Co. analyst Vernon Bernardino initiated coverage on shares of Intercept Pharmaceuticals Inc (NASDAQ:ICPT) with a Hold rating and a $272 price target, which reflects a potential downside of almost 8% from where the stock is currently trading.

Bernardino noted, “We are bullish long-term on obeticholic acid (OCA) as an important drug for liver diseases but believe its blockbuster market potential (est. annual sales of $3.7BN in 2025) is priced in. We believe there is high likelihood that ICPT will be an acquisition target. We therefore used sum-of-the-parts (SOTP) analysis and believe a takeout value of $273 per share imputes the significant premium to the $44 intrinsic value we derive in our cash flow analysis that a would-be acquirer could propose as a competitive bid.”

Furthermore, “We do not believe such a premium unprecedented, as the $11BN bid made by Gilead Sciences Inc. for Pharmasset in November 2011 was an 89% premium above the closing price of VRUS, which had already risen more than 240% over the past year. Thus, with a takeout fully priced and much risk to the downside, we would look for prices in the $150-$175 range before being buyers of the stock.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Vernon Bernardino has a total average return of -13.9% and a 28.2% success rate. Bernardino is ranked #3452 out of 3516 analysts.

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