Analysts Targets OverView-------Ave. $23.29.
Should we listen to the Analysts? Well looking back at the MPH situation I'd have to say Yes....we have to put some credence into what they have to say. Phillippa Flint from RBC recently proved that point when she not only SLASHED her Target for MPH BUT DOWNGRADED and suggested shareholders sell due to the Lousy Phasell Results that the Phasellll Trial was based on. She gave the Phaselll little chance of success.......that was the first week of October.
Every Analyst is different and looks at the business in a different way. They can also be quite self serving whether they are Increasing a Target or Lowering a Target. Some may not be directly involved with coverage of a Co. but can Imply Value by Valuing the partners share of a Drug or Technology such as NCB has. Transitions Analysts can be a good guide but you can't put your faith into any just one of them. Do your own DD PERIOD. I read most of them and can pick out their material mistakes but on the flip side I can learn a couple things here and there from them having such easy access to the top guys and in some circumstances when they have that same sort of access with Partners.
Then there is the Forecasts and these of course contain a lot of assumptions such as Total Market, Market Penetration, Cost per Treatment per month, Cost of Production, Milestone Payments, Percent Discounted, Timelines, etc. etc.
One Analyst may think that a 1.5% Market Penetration in the second year with a $1.5 Billion Total Market is correct whilst another may think that 5.0% in the second year with a $3.5Billion Total Market is easily achievable. Big Difference. Makes for a lot of different and varied number crunching from the analysts.
Then there is the other variables like one Analyst will use SOTP's or Comparable Company or Monte Carlo Simulations or NPV Determinations or EPS Valuations etc. Or a combination of a couple or three. Each Analyst seems to have their own Risk Assessed Percentage for different Stages of Development, and whether or not it is a Small Molecule or a Biologic is taken into consideration, whether or not it is partnered, etc.
Maybe we'll just Average their Targets. Every one of them has at least a BUY or OUTPERFORM or the like. If anyone has the Octogon OR the Paradigm Target let us in on the amount........TIA
Analyst--------Target
Laurentian-----$23.00
GMP------------$25.00
Cormark--------$18.50
Leerink Swann--$24.00
Versant--------$17.00
NCB------------$34.50
Cowen & Co.----$19.31
RBC C.M.-------$25.00
Octogon--------$??.??
Paradigm-------$??.??
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Average Target=$23.29 ----
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In the end do your own calculations using your own assumptions and risk assessment and everything........If you were to do that today you'd more than likely find that Transition is way undervalued right now ........ The Average of the Analysts Targets certainly support that statement.
IMO I think many are going to be surprised about a few things in the very near future.
GPP All.