JPMorgan Upgrades Ares Capital (ARCC) to Overweight

JPMorgan analyst Richard Shane upgraded Ares Capital (NASDAQ: ARCC) from Neutral to Overweight with a price target of $22.00.

The analyst comments "We initiate coverage of OGN with a Buy rating and a 12-month price target of $40, implying 26% upside from its current levels. At the core of our investment recommendation is our view that the value currently being attributed to OGN's Women's Health (WH) business by the market, reflects an under-appreciation of OGN's ability to better position assets including Nexplanon and the Fertility products portfolio to benefit from positive secular trends and favorable market dynamics, to deliver growth above historical levels and consensus estimates. Our above consensus forecasts for each franchise underpin our upside valuation assessment of $7bn, vs. the $5bn that we assess is embedded within the current valuation. Further, embedded within our view is uncertainty regarding the prospect that management can abate declining revenue growth across the Established Brands (EB) portfolio. It is our belief that based on our assessment a higher valuation should be ascribed to the WH business, the implied valuation for EB gives the company a fairly wide margin for error in terms of delivery over the near-term. Finally, while we are in-line with consensus on Hadlima (Humira Biosimilar), we see the opportunity for the product to deliver incremental upside given the size of the TAM. We provide further details within."

For an analyst ratings summary and ratings history on Ares Capital click here. For more ratings news on Ares Capital click here.

Shares of Ares Capital closed at $19.80 yesterday.

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