Canaccord Genuity on Specialty Pharmaceutical: Top Picks Have Less Volatility With Earnings
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Rating Summary:
17 Buy, 22 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Canaccord Genuity specialty pharmaceutical analyst Randall Stanicky noted three reasons he expects less volatility associated with earnings among specialty pharma companies in his coverage universe:
(1) Most companies have recently given 2012 guidance with few changes anticipated this early in the year
(2) There are more material near-term catalysts that will be the primary stock driver for most names
(3) We see less Q1 debate around numbers than in past quarters, perhaps with the exception of PRGO and MYL
Consequently, his top long picks were the following BUY rated companies:
TEVA (Nasdaq: TEVA) (BUY): The stock is linked to an imminent trial decision around Copaxone that offers attractive risk/reward to the upside.
Watson (NYSE: WPI) (BUY): Focus is squarely on the likelihood of an Actavis deal. We think expectations are still reasonable and would want to own WPI into an announcement based on what see as material EPS upside potential, though do recognize the stock is now better owned.
Impax Laboratories (Nasdaq: IPXL) (BUY): We’re raising Q1 EPS and expect a beat on higher Adderall XR assumptions (supplier Shire reports 4/26) though see two near-term catalysts more key to the stock (1) settlement with Shire for higher Adderall XR supply levels (and potentially product deal) and (2) warning letter remediation.
(1) Most companies have recently given 2012 guidance with few changes anticipated this early in the year
(2) There are more material near-term catalysts that will be the primary stock driver for most names
(3) We see less Q1 debate around numbers than in past quarters, perhaps with the exception of PRGO and MYL
Consequently, his top long picks were the following BUY rated companies:
TEVA (Nasdaq: TEVA) (BUY): The stock is linked to an imminent trial decision around Copaxone that offers attractive risk/reward to the upside.
Watson (NYSE: WPI) (BUY): Focus is squarely on the likelihood of an Actavis deal. We think expectations are still reasonable and would want to own WPI into an announcement based on what see as material EPS upside potential, though do recognize the stock is now better owned.
Impax Laboratories (Nasdaq: IPXL) (BUY): We’re raising Q1 EPS and expect a beat on higher Adderall XR assumptions (supplier Shire reports 4/26) though see two near-term catalysts more key to the stock (1) settlement with Shire for higher Adderall XR supply levels (and potentially product deal) and (2) warning letter remediation.
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