Actavis Remains One Of Our Top Picks Going Into Its 2Q14 Earnings Call, Says Cannacord

In a research note released yesterday, Cannacord Genuity analyst Corey Davis reaffirmed a Buy rating on Actavis (ACT) with a price target of $275, which represents high expectations for the stock as it goes into its 2Q14 earnings call.

Davis noted, “ACT remains one of our top picks going into its 2Q14 earnings call on August 5, which will provide 2014 and 2015 guidance and which we expect to be a catalyst for the stock”. He added, “Forest provides durable growth. The FRX acquisition is why we see the trend continuing. Without it, we’d modeled anemic 5% growth. However, with Forest now having 11 new product franchises – all with exclusivity well beyond 2020 and with our projected revenue CAGR from ’14-’20 on the FRX portfolio of 15% – it provides outstanding visibility on the long-term growth profile of ACT”.

Davis explained his price target: “We use a standard DCF for our $275 target, which would be a ~27% return. We use a 10% discount rate and a terminal growth of 1.3%. This target also equates to a P/E of 16x 2015E EPS, right on the group average. Risks include: failure to integrate FRX; undue pricing in US generics; and/or failure to obtain FDA approvals for the seven key FRX products”.

According to, which measures analysts and bloggers success rate based on how their calls perform, analyst Corey Davis currently has a one-year average return of 36.7% and a 78% success rate. Davis has an 3.2% average profit recommending ACT, and is ranked #35 out of 3211 analysts.

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