Deutsche Bank Upgrades Akorn (AKRX) to Buy; Sell-Off Overdone, Says Analyst
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Deutsche Bank upgraded Akorn (NASDAQ: AKRX) from Hold to Buy with a price target of $28. Analyst Gregg Gilbert said its sell-off was overdone.
"AKRX shares are down 20% since 11/3, when the company reported 3Q results and news emerged about a DOJ investigation into suspected price collusion involving generic companies that could result in charges by year-end. The quarter itself was decent, although AKRX announced that FDA clearance of its Decatur injectables facility will require a re inspection, the timing of which is uncertain. Unlike other generic stocks, AKRX shares have not begun to recover since 11/3, which we believe could be tied to concerns about Decatur on top of generic industry risks. Given management’s confidence that clearing Decatur is a when not an if, we like the set up for the stock from here, and are moving to a Buy rating (our PT remains $28)," said Gilbert.
"Regarding the DOJ investigation, as far as we know AKRX has not been notified that it is a subject of the investigation. We also believe that management is shareholder friendly and is doing the right things to position AKRX for long-term value creation. An under-levered balance sheet (net debt/EBITDA of ~1.3x) creates some optionality as well," added the analyst.
Shares of Akorn closed at $19.68 yesterday.
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