RE:RBC Valuation for CXRX (USD$)I think RBC's applying a 10% discount to the group average multiple of 11x is fair. Sure call it 10x earnings if you want. It is still way below the 22x or so it reached 2 months ago.
As they are estimating about $10/sh Canadian earnings for 2017, that has us trading at a 4x 2017 forward earnings multiple. Where else can you find such a cheap stock?
We are also roughly at 5x the companies 2016 estimated earnings. Less than half the sector average.
If RBC thinks a roughly $100/sh Cdn target is appropriate, I'm inclinded to agree with them, based on the incredibly cheap metrics.
TechTarget wrote: "We value Concordia shares by averaging the results of our P/E valuation and DCF analysis.
Applying a 10x multiple to our 2017 earnings forecast of $7.48 generates a value of $74.84. The
10x multiple represents a ~10% discount to the group average of ~11x. We believe a discount
relative to the group is appropriate, as the majority of the assets have lost or are nearing the
end of patent protection. Combined with a modest R&D pipeline, organic growth is challenged.
Our DCF value (9.5% WACC and a 0.5% terminal growth rate) equates to $79.65. The average of
our P/E and DCF values is $77.24, hence our $77 price target. There are no further acquisitions
included in our base case. We assume that Photofrin is approved for bile duct cancer in 2018."