Canaccord Adams Upgrades Elan (ELN) to Buy On Tysabri Prospects

January 13, 2009 10:36 AM EST

Canaccord Adams upgrades Elan Corp (NYSE: ELN) from Sell to Buy and raised its price target from $6.90 to $10.87, saying commercial success of Tysabri would outweigh any lingering concerns on Elan’s debt.

Analyst Karl Keegan, said, "In our view there are much more substantial reasons to own Elan in 2009, especially the underestimation of Tysabri's commercial prospects. This drug alone could significantly underpin the current valuation. We also highlight that, whilst we remain sceptical of bapineuzumab as a >US$10 billion drug, it could easily be a blockbuster by conventional standards. Furthermore we speculate that recent strengthening of the management team could result in a more approachable, investor-friendly company relying more on real prospects rather than hype."

This morning, Elan announced that is has hired Citigroup to review strategic alternatives. Elan said the goal is to secure access to the necessary financial resources and commercial infrastructure to allow Elan to accelerate the development and commercialization of its extensive pipeline and product portfolio while maximizing the ability of its shareholders to participate in the resulting longer term value creation. The range of alternatives that will be assessed could include minority investment or strategic alliance, a merger or sale. Elan's spokesman told CNBC's David Faber that the preference for the company is for a minority investor to come in, which will allow them to continue research.

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