Lannett Company (LCI) Stock Makes the Street Go Wild

Generic pharmaceutical products provider Lannett Company (LCI) is a puzzle.

Lannett shares jumped as much as 50% today, before trimming back some gains to trade up about 40%. Why? Your guess is as good as anybody else’s.

SunTrust analyst Gregg Gilbert believes “management has been doing the right things to diversify the business and grow out of the levo trough.” However, the analyst remains sidelined on the stock “pending greater visibility on the durability and profitability of the evolving portfolio and strategy to deal with the large debt load.” The investigation into generic drug price fixing in the industry gives the analyst another reason to be worried about. But overall, the analyst believes that “this risk has taken more out of generic market caps than seems reasonable.”

Gilbert rates Lannett stock a Hold along with a $9.00 price target, which implies nearly 7% upside from current levels. (To watch Gilbert’s track record, click here)

BMO analyst Gary Nachman believes Lannett stock is worth $10 a share, the highest price target of any of the analysts recommending the stock today, though he rates the stock Neutral.

Nachman stated, “LCI is executing well trying to manage through Levo loss and base erosion (typically mid-single digits, although some upside there in F2019). New product launches are expected to generate ~$75mm annually (F2019 on track for that), with about half expected from internal R&D and half from inlicensed products. Recently approved AB-rated Methylphenidate with partner Andor (launch late-June) and Thalidomide (addressing CRL, expected launch C2020) should be important contributors. Numbrino approval is expected by year-end, but LCI will cease unapproved C-topical sales ($3mm/qtr.) in August. On cost savings, LCI has completed all necessary actions and will finalize Cody Labs transition soon. LCI is proactively managing debt load (repurchased $24mm in open market, cash ~$205mm) and is confident in maintaining covenant compliance on 2020 debt.”

Ultimately, TipRanks reveals LCI as a stock that has not drawn a vote of confidence among Wall Street opinion. Out of 5 analysts polled in the last 12 months, all 5 rate the stock Hold/Neutral. Worthy of note, the 12-month average price target stands at $8.33, which aligns evenly with where the stock is currently trading. (See LCI’s price targets and analyst ratings on TipRanks)


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