Mizuho Reiterates Neutral on Mallinckrodt PLC Following Acquisition of Three Surgical Products

Mizuho analyst Irina Rivkind Koffler weighed in today on Mallinckrodt PLC (NYSE:MNK), after the pharmaceutical company entered into a purchase agreement with The Medicines Company to acquire a small portfolio of three hospital products for $175 million and plans to invest in launching two of them in late 2016.

The analyst commented, “We think there could be other products added to this group over time as well.” The analyst continued, “Based on an expected deal close of 2Q:FY16, we expect a relaunch of Recothrom in the same quarter and a 2H:16 launch for Preveleak and Raplixa. Mgmt plans to invest in promotion around the two new launches in FY:16, making the deal EPS neutral, but guided to FY:17 accretion. We think that some of the promotional spending associated with this launch could get pushed into 1H:FY:17 so model a penny of accretion in FY:16. Following our conversation with mgmt, we estimate gross margins for the products to fall in the 60-70% range and we model FY:17 sales of $71M growing to $92.8M in FY:20. Mgmt outlined longer term peak sales goals of $125M for all three products.”

Koffler reiterated a Neutral rating on shares of Mallinckrodt, with a price target of $72, which represents a slight upside potential from current levels.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Irina Rivkind Koffler has a yearly average return of 45.6% and a 72.7% success rate. Koffler is ranked #2 out of 3643 analysts.

Out of the 14 analysts polled by TipRanks, 9 rate Mallinckrodt stock a Buy, while 5 rate the stock a Hold. With a return potential of 49%, the stock’s consensus target price stands at $105.50.



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