Takeover or more than 500% ReturnI have to say that I haven't been impressed with what's come to light with Valeant's price increases over the past couple years. This excessive greed started by Valeant has directly led to the current crisis we have in the pharmaceutical sector. It's no surprise that the American politicians are taking a close look at drug prices.
I can't say that Concordia is guilt-free but in everything I've read, Concordia is pricing their drugs competitively with the market. So let's look at this stock rationally.
Next year Concordia should earn $7/share or better. If they grow their earnings at a modest 16% a year for the following 4 years they'll earn $13/share in 2020, which is conservative. At this growth rate they're worth 20x earnings. That's $260 a share in 2020.
Their share price today is irrationally low and too attractive to pass up. As soon as the Amdipharm deal goes through they'll get taken out at $80-120 a share by year-end. It's unfortunate that we won't see our 500%+ return.