Roth Capital Reiterates Buy On ANI Pharmaceuticals Following Vancocin Acquisition
Friday, after the close, ANI Pharmaceuticals (ANIP) announced that the company acquired US rights to the antibiotic Vancocin (125mg and 250mg capsules) from Shire (SHPG). The company paid $11 million in cash for rights plus inventory on hand. The transaction is immediately accretive with a launch under its own label likely in 4Q14.
In reaction to the acquisition, Roth Capital analyst Scott Henry today reiterated a Buy rating on ANIP with a $40 price target.
Henry noted, “We viewed this as a highly favorable deal for ANIP investors. Based on our analysis, the deal has a payback of < 3 years, could be accretive to EPS by ~15 – 20 cents, has little risk, and could have potential upside levers from additional dosage forms”. He continued, “These capsule strengths of Vancocin generate ~$5.4 million in revenues and $4 million in non-GAAP EBITDA (per company guidance). The product is already generic and these “tail” revenues are relatively stable. Based on this math, the product should have a payback in 2.5 – 3 years (which is quite favorable in our opinion)”. The analyst concluded, “We view this as the second great deal in a row for ANIP. Paybacks of < 3 years are relatively rare in specialty pharma, and we believe that this adds value beyond simply accretion to the EPS statement”.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Scott Henry has a 20.8% average return and a 37.0% success rate. Henry has a -19.5% average return when recommending ANIP, and is ranked #302 out of 3200 analysts.
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