Piper Jaffray Reiterates Overweight on Mallinckrodt (MNK) Following Solid 1Q Results
Piper Jaffray maintained an Overweight rating on Mallinckrodt plc (NYSE: MNK), and cut the price target to $97.00 (from $103.00), following the company's 1Q earnings report. MNK reported revenue and EPS of $915M and $2.09, respectively, compared to the Street's estimates of $889M and $1.78. MNK cautioned that seasonality and deductible resets are likely to be headwinds in the next fiscal quarter.
Analyst David Amsellem commented, "Mallinckrodt reported fiscal 1Q16 revenue and EPS of $915M and $2.09, respectively, north of Street estimates of $889M and $1.78. Acthar sales grew by 8%, with management citing particularly strong growth in the rheumatology and pulmonology settings. Though MNK sounded a note of caution on Acthar growth expectations over the next couple of quarters due in part to increased contracting with payors, we nonetheless believe that the company has put the product on a sustainable footing (at a minimum). Given that backdrop, along with relatively favorable dynamics for the hospital segment, MNK in our view is well positioned to deliver a long-term EPS CAGR potentially in the low double digits, translating into an attractive valuation in the context of a FY16 P/E of 8x our estimate. We reiterate our Overweight rating and are lowering our PT to $97 from $103 (mainly a function of higher R&D estimates)."
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Shares of Mallinckrodt plc closed at $65.71 yesterday.