UPDATE: UBS Upgrades Achillion Pharmaceuticals (ACHN) to Buy

UBS upgraded Achillion Pharmaceuticals (NASDAQ: ACHN) from Neutral to Buy with a price target of $11.

Analyst Andrew Peters said, "The recent acquisition of Idenix by Merck has shifted our view on what is needed to “de-risk” assets in HCV and now see the upcoming 7-day read-out as a key event that should drive strategic interest. Prior to the IDIX deal we had seen ph2 combo data as necessary to better define the clinical profile of a nuc, but think that asset scarcity may trump this view and believe pre-clinical and 7-day data may be sufficient to justify investment in the space. The competitive process behind the IDIX deal underscores our view that a nuc is needed to be successful in HCV, with the opportunity beyond GT1 a key focus. While we see differences between IDIX and ACHN (including nuc IP and insight into FDA nuc safety concerns and pre-clinical requirements), with a market cap of ~20% vs. the IDIX deal, we believe the discount may indeed be overdone."

"Despite the recent 100%+ move in ACHN shares, we still see material upside from current levels and view the current valuation as offering asymmetric risk/reward ahead of the near-term catalyst path. Our revenue estimates move higher on increased confidence in our base-case scenario and risk-adj. revenue from the nuc program," he added.

For an analyst ratings summary and ratings history on Achillion Pharmaceuticals click here. For more ratings news on Achillion Pharmaceuticals click here.

Shares of Achillion Pharmaceuticals closed at $7.79 yesterday.

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