Jefferies Maintains PT, Buy Rating on Sagent Pharma (SGNT); Says Generic Levaquin Will Add Modest Upside
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Price: $21.76 --0%
Rating Summary:
1 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
1 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Jefferies is keeping its Buy rating and $31 price target on Sagent Pharmaceuticals (Nasdaq: SGNT) following FDA approval of Sagent's second ANDA for generic Levaquin.
Commenting on the news, Jefferies states, "Sagent appears to be the only generic approved for this pre-mixed "bag" formulation -- presenting the potential for significant upside. Right now we have only $4.5M in our model for 2011, but with a $150M brand productand as a sole generic (we don't know about an AG), it could be closer to $30M, which could raise EPS by $0.05 in 2011."
Jefferies believes that levofloxacin should fit into Sagent's existing portfolio of generic injectible antibiotics. Further: "Given the small size of the vial (~$6M in LTM sales, 4% of the injectable Levaquin market), it's unlikely Sagent will even launch this product. As for the pre-mixed bags, we had previously assumed: 1) as many as 4-5 potential generic competitors; 2) given the number of competitors, a 60% discount off current brand pricing (so a total addressable market opportunity of ~$60M); and 3) Sagent market share of roughly 15%. Thus, on an annualized basis, this results in a $9M opportunity for Sagent, but given a launch mid-year, we've currently modeled $4.5M in revenue contribution from this product in 2011. We also used a very low gross margin assumption of 10%."
Assuming that Sagent is the sole supplier of levofloxacin for the market for three months, total revs of $15 million would be recorded in Q3 sales. Jefferies said, compared to its original assumption of $2.5 million in revs, the addition of $12.5 million could translate to $3 million of net income, or about 3 cents per share. With competition expected to heat up in the fourth quarter, Jefferies is expecting further net income upside of 2 cents per share.
For more analyst color on Sagent, click here. For a ratings history of Sagent, click here.
Sagent shares are trading flat this morning.
Commenting on the news, Jefferies states, "Sagent appears to be the only generic approved for this pre-mixed "bag" formulation -- presenting the potential for significant upside. Right now we have only $4.5M in our model for 2011, but with a $150M brand productand as a sole generic (we don't know about an AG), it could be closer to $30M, which could raise EPS by $0.05 in 2011."
Jefferies believes that levofloxacin should fit into Sagent's existing portfolio of generic injectible antibiotics. Further: "Given the small size of the vial (~$6M in LTM sales, 4% of the injectable Levaquin market), it's unlikely Sagent will even launch this product. As for the pre-mixed bags, we had previously assumed: 1) as many as 4-5 potential generic competitors; 2) given the number of competitors, a 60% discount off current brand pricing (so a total addressable market opportunity of ~$60M); and 3) Sagent market share of roughly 15%. Thus, on an annualized basis, this results in a $9M opportunity for Sagent, but given a launch mid-year, we've currently modeled $4.5M in revenue contribution from this product in 2011. We also used a very low gross margin assumption of 10%."
Assuming that Sagent is the sole supplier of levofloxacin for the market for three months, total revs of $15 million would be recorded in Q3 sales. Jefferies said, compared to its original assumption of $2.5 million in revs, the addition of $12.5 million could translate to $3 million of net income, or about 3 cents per share. With competition expected to heat up in the fourth quarter, Jefferies is expecting further net income upside of 2 cents per share.
For more analyst color on Sagent, click here. For a ratings history of Sagent, click here.
Sagent shares are trading flat this morning.
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