Leerink Partners Starts Patheon Holdings (PTHN) at Outperform
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Leerink Partners initiates coverage on Patheon Holdings (NYSE: PTHN) with a Outperform rating and a price target of $31.00.
Analyst Puneet Souda commented, "Patheon is poised to gain share in the highly fragmented contract development industry given its scale and end-to-end service offering for early-stage biotech to large-cap biopharma companies. We believe PTHN's scale will also continue to benefit it given the sticky nature of the business, generally high switching costs and regulatory burden associated with changing CDMOs. With current CDMO penetration ranging between only 26%-31% according to PTHN, compared to the 50% market penetration for CROs, we are inclined to believe that penetration for CDMOs including Patheon is only likely to grind higher. We remain confident that PTHN can deliver on an 8% revenue CAGR into 2019, but is also likely to lever acquisitions to drive growth even higher. During 2015, the company was involved in the development of 17 new drugs and more than 25% of the 100 top-selling drugs, which highlights in our view the value that large-cap biopharma places on a strategic development and a manufacturing partner such as Patheon."
Shares of Patheon Holdings closed at $28.10 yesterday.
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