Alexion Pharmaceuticals (ALXN) Stock Approaching 'Worst-Case' Scenario - Leerink
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Leerink Partners analyst Geoffrey Porges weighed in on Alexion Pharmaceuticals (NASDAQ: ALXN) following the sell-off on 10-Q delay. The firm said the stock is approaching worst-case downside scenarios that can only be justified if one assumes the failure of pipeline indications and of any future Soliris label expansion. They believe the stock can recover to ~$150/share.
Porges commented, "Compared to peer large-cap high growth biotechs such as Regeneron (REGN, OP) and Vertex (VRTX, OP), Alexion (ALXN, OP) missed the post-election biotech rally and has continued its underperformance. Over a short 10-day period, a ~30% valuation gap has emerged between ALXN’s stock and its peers. Further, ALXN’s absolute valuation is at or approaching worst-case downside scenarios that can only be justified if one assumes the failure of pipeline indications and of any future Soliris label expansions. We calculate that the value of the current Soliris label, Strensiq, and Kanuma are $100, if we assume no improvement in operating margins (from the current multi-launch level of investment); if we assume the margin improves materially (with multiple pipeline disappointments) then the current products with no additional indications are worth $125. We believe the current stock pullback presents a unique opportunity for investors, and potentially trade buyers, to secure a long duration, high potential, high margin biopharmaceutical franchise; the value of this franchise, and its future expansion opportunities, are unlikely to be materially affected by the internal investigations delaying the 10-Q filing. Once this uncertainty is resolved, which is likely to occur by the end of the month, we believe the stock can recover to ~$150."
The firm maintained an Outperform rating and price target of $211 on ALXN.
Shares of Alexion Pharmaceuticals closed at $113.62 yesterday.
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