Citron Research Negative on Lannett (LCI); Sees Shares at 'Zero' Over Long Term

(Updated - January 17, 2017 11:51 AM EST)

Lannett (NYSE: LCI) falls as Citron Research out negative, with zero dollar long-term price target.

Citron said Lannett will be the first pharma company to go bankrupt amid the drug pricing scrutiny. They note that if even modest price cuts hit one of the company's cash cow drugs the company will violate its debt covenants.

They see the stock worth $13-$15 near term and worthless over the long-term.

From the Report:

"While Valeant, Mylan, and Horizon have multiple product lines across numerous specialties, Lannett is heavily leveraged, and extremely dependent on the profit windfall from just a few of its drugs to generate enough revenue to service its debt load.

In the past month we have seen a series of lawsuits against Lannett that Wall Street has completely overlooked. These lawsuits, along with the Trump administration's dedication to confront indiscriminate drug price raises, illuminates a clear path to 0 for the equity of Lannett.

In this story Citron will explain these 4 essential points

1. Explain the dependence of Lannett’s business on only three products (most heavily reliant on just one).

2. Reference NEW COURT DOCUMENTS showing conclusively that Lannett has indeed conspired to fix drug pricing.

3. Illustrate the effect of price competition on generic drugs – through Lannett's own product mix

4. Provide a sensitivity analysis projecting how Lannett WILL become insolvent if and when it is forced to take modest price reductions.

FULL REPORT

Citron exposes the lawsuits that will drive Lannett (LCI) to 0. Price gouging and leverage at its worst in pharma. https://t.co/Fn9MwJO3Xn

— Citron Research (@CitronResearch) January 17, 2017

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