Wedbush Slashes Price Target on SIGA Tech. (SIGA), But Still Sees 350% Upside

September 23, 2011 9:03 AM EDT
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Price: $2.98 -0.67%

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    Up: 24 | Down: 17 | New: 14
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Wedbush cut its price target on SIGA Tech. (NASDAQ: SIGA) from $23 to $11 but maintained their Outperform rating following a negative ruling in favor of PharmAthene, Inc. (NYSE: PIP) with a 50% profit sharing award for ST-246.

The firm comments, "Below $3/share, SIGA has a market capitalization of $130 million, a level for which, in our opinion, the Street is assessing little value for what we believe will be a continuing revenue stream around ST-246. First, consider only the initial 1.7 million courses valued at $300 million. Assuming 5 years dating, average revenues to provision and maintaining these doses in the SNS will be $60 million per year. At 50% net margin after tax, we value this component of the contract alone at $330 million (11x profits; potentially $160 million or roughly $3/share each to SIGA and PIP).

The firm said based upon a review of the posture of the SNS to other biological threats, they see the likelihood as very high that HHS issues additional RFP's and purchases 12 million additional courses of ST-246 as was called for in the initial RFP.

The firm's $11 price target still suggests 350% upside.

For more ratings news on SIGA Tech. click here and for the rating history of SIGA Tech. click here.

Shares of SIGA Tech. closed at $2.69 yesterday.

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