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Concordia Healthcare Corp. T.CXR.R



TSX:CXR.R - Post by User

Post by themangokidon Mar 23, 2016 8:05pm
440 Views
Post# 24695506

in a vacuum...

in a vacuum......the results were strong. 2015 eps of $4.38US ($5.79 Canadian) giving cxr a 2015 p/e of 6.96. 2016 guidance of $6.27 - $6.77 (current consensus from the street is $6.30). Even with earnings of $6 per share that's a 2016 p/e of 5.08. And growth forecasted for 2017 and beyond.

However, we are not trading in a vacuum. I think there are enough positives for the longs to be happy about but there is also alot of negative sentiment about the 90% profit margins and worry about regulatory risk (thats been around for as long as I can remember but I guess its particularly in the foreground this year because of the election cycle) that will give the shorts their talking points.

Assuming the CC is a net neutral (I dont think it will be but assuming it is for simplicity's sake) I think we may get a small bump up in multiple but for the most part grind sideways till next quarter.  And I think the stock will react the same way post next quarter - a small bump up in multiple and grind sideways till the quarter after that. Rinse and repeat.

I dont think there is going to be a knock out blow that propels the shares to $80 within a few weeks/months but I think the story is real here so that as earnings rise and debt decreases there can be some real nice multiple exansion and earnings growth.

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