Mallinckrodt (MNK) PT, Estimates Updated at Piper Jaffray Following Sale of Nuclear Business
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Piper Jaffray analyst David Amsellem updated estimates and his price target on Mallinckrodt plc (NYSE: MNK) to $105.00 (from $112.00) following the sale of the Nuclear business, but maintained an Overweight rating.
Amsellem commented, "We are revising our model to reflect the recent announcement by Mallinckrodt that it is selling its nuclear imaging business to IBA Molecular for around $690M. The transaction was not a surprise to us given that MNK had divested its contrast media business last year, and given has been aiming to free up capital to further add to its specialty brands segment via further M&A activity. We continue to believe that MNK is well positioned to deliver a long-term EPS CAGR potentially in the double digits, driven in part by sustained volume growth for Acthar (refer to our note on 8/23/16 for more details). This translates into an attractive valuation in the context of a 2017 P/E of 9x our revised EPS estimate. We reiterate our Overweight rating and are adjusting our PT to $105 from $112, reflecting the removal of the nuclear imaging business from our estimates."
Shares of Mallinckrodt plc closed at $72.42 yesterday.
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