Impax Laboratories (IPXL): Cutting PT To $18 On Teva Price Cuts - RBC

November 10, 2016 6:22 AM EST
Get Alerts IPXL Hot Sheet
Price: $12.05 --0%

Rating Summary:
    8 Buy, 16 Hold, 3 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 7 | Down: 8 | New: 1
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RBC Capital analyst, Randall Stanicky reiterated his Sector Perform rating on shares of Impax Laboratories (NASDAQ: IPXL) but cut his price target to $18 from $30 after the company became the latest manufacturer to report increasing P&L pressure driven by sector headwinds, as the down-cycle move from peak sector profitability continues.

The analyst stated "IPXL's weakness was amplified by a number of company-specific challenges that collectively should take Street forecasts materially lower next year and add more uncertainty as we head into 2017."

The price cut on a handful of acquired TEVA products came following the 8/2 acquisition and comprised 70% of the guidance reduction. That points to 4Q revenue and EPS of ~$221 million and $0.14, which is 21% and 75% below Street pre-3Q levels. The bigger question mark is where gross margin trends are heading into 2017 as the 4Q implied margin is 43% and well below the YTD 51.1%. Each 100 bps on 2016E equates to $0.08 in EPS.

The 2016 guide down and messaging on the call should take 2017E EBITDA forecasts lower and likely leave a decent spread around consensus.

For an analyst ratings summary and ratings history on Impax Laboratories click here. For more ratings news on Impax Laboratories click here.

Shares of Impax Laboratories closed at $14.00 yesterday.

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