RE:CIBC/RBCVery dangerous to be truly long here. If the UK bill passes in the spring as suggested you can expect price targets in the $1-1.75 range if there are price rollbacks. Once we get through taxloss season the UK bill will be a wildcard overhang. A successful class action however could end it all abruptly. This will be a stock for traders trying to scalp a small gain and the pump and dumpers until there is clarity they can survive, meaningfully pay down debt and show a path to earnings growth, but the math makes it very unlikely at this point.
retiredcf wrote: Clearly the lunatics have taken over the asylum. Some of these people need to get a life.
As a clent of both CIBC and RBC, I can clear the air on what is accurate and what is fantasy ($250????).
I posted the RBC report on 11 Oct. Their current target is US$14.00, upside is US$27.00 and downside is US$4.00 (we're currently just below that).
As for CIBC, their revised target is indeed US$2.50 or about C$3.30. GLTA
Concordia International Corp.
Revising Estimates For Recent Events
What's The Event
The strategic review has concluded, and we update our forecasts to reflect recently disclosed information and events. The net result is a lowering of our target price to $2.50 (from $7.80). We also provide our Q3 preview.
Our forecast revisions for Q3/16 and beyond reflect the following:
* New data disclosed by the company on the US business reflecting
updated revenue splits of its largest US drugs. This results in an
increase to our US revenue estimates, although we still forecast
annual declines.
* AMCo revenue revised downwards to capture the effects of UK drug
pricing bill, expected new product launches and new CIBC Economics FX deck.
While the company touts its 60 launches by Q4/18, the UK tabled a bill aimed at taking control over unbranded drug pricing. The proposed Health Services Medical Supplies (Costs) Bill is expected to pass by spring 2017. We are unsure of the exact impact of this pricing legislation, but have reduced our UK revenue slightly as we believe there will be restrictions on AMCo's ability to raise prices in the future in the most realistic scenario. Should the legislation require AMCo to roll back prices, this would result in further downside to our estimates.
* Anticipation of a "hard Brexit" has renewed pessimism in the UK economy, and a foreseeably weak Sterling. We have lowered our UK revenues to reflect the latest CIBC Economics FX forecasts.
* The close of the $350 million debt deal marks the end of the strategic review. While the added debt helps short-term liquidity, the company remains prohibitively levered. Interest expense increases by $31.5 million annually, and we remain very concerned about the company's ability to repay its debt obligations, and now predict a shortfall of about $1.4 billion by 2023.
* For Q3/16 we forecast total revenue of $211 million and Adj. EBITDA of $123.8 million vs consensus of $209 million and $122.6 million, respectively.
* Our target price of $2.50 is based on 7x 2017E EV/EBITDA, which is a discount to the global specialty pharma average of 8.5x