Ladenburg Thalmann Upgrades Codexis, Inc. (CDXS) to Buy, $6.25 PT

Ladenburg Thalmann upgraded Codexis, Inc. (NASDAQ: CDXS) from Neutral to Buy with a price target of $6.25.

Analyst Kevin DeGeeter writes: "We are upgrading shares of CDXS from Neutral to Buy and instituting a $6.25 PT based on growing confidence 1) the company will announce a CodeEvolver tech transfer agreement in 2017, 2) 2017 financial guidance to be given in 1Q17 may include material recurring revenues from partner GlaxoSmithKline (GSK, $38.84, Not Rated) and 3) a growing base of recurring revenue may result in re-valuation of CDXS shares and support multiple expansion. While we have limited visibility on the exact timing for a new CodeEvolver agreement, our discussions with pharmaceutical and biotechnology companies confirm a high level of interest in use of biocatalysts as a primary method to reduce COGS and offset potential margin contraction associated with pricing pressure on certain classes of small molecule therapeutics. Based on existing contract service relationships with 7 of the top 10 pharmaceutical companies and two previously signed CodeEvolver agreements - GSK and Merck (MRK, $60.15, Not Rated) - we believe CDXS is well positioned to benefit from these trends. Lastly, we have long viewed CDXS as a unique pharmaceutical services restructuring story transitioning from a fee-for-service model to a licensing business model with more recurring revenue and increased visibility on future revenue growth. As recurring revenue becomes a larger portion of revenue mix beginning in 2017 and accelerating in 2018, we expect investors to reward the improving revenue visibility with sustained multiple expansion to the range 5x-6x enjoyed by high margin pharmaceutical supply chain product companies. Our $6.25 PT is based on 5.5x multiple to 2018 revenues of $48.2M divided by share count of 42.1 million"

For an analyst ratings summary and ratings history on Codexis, Inc. click here. For more ratings news on Codexis, Inc. click here.

Shares of Codexis, Inc. closed at $4.50 yesterday.

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