EbbFlow88 wrote: Expecting to see “strength” when it reports its third-quarter financial results in November, Stifel analyst Justin Keywood thinks it’s “time to step back in” to Knight Therapeutics Inc. (GUD-T), prompting him to raise his rating to “buy” from “hold.”
“In particular, we forecast strength in FQ3 with EBITDA of $13-million versus the street at $10-million,” he said. “Q3 will show the first full quarter contribution of Exelon (Alzheimer product) that generated $4-million of EBITDA in Q2 but only for five weeks, and we estimate a contribution of $9-million for Q3. There is also continued expected strength from Knight’s infectious disease portfolio, where certain medicines are being used to help treat COVID-19 symptoms in LATAM as other new product launches start to gain traction.
“We see downside support as well with GUD trading near a 52-week low, at 11 times 2022 EBITDA (peers at 13 times) and an active NCIB with purchases recently made at $5.15. Overall, there is a solid reward to risk trade.”
Emphasizing its “solid” balance sheet, Mr. Keywood also touted its “long-term value creation plan,” pointing to its 26-year consecutive record revenue streak.
“Knight is expected to continue to acquire and launch new products, where the streak should continue and lead to more value,” he said.
The analyst raised his target for Montreal-based company’s shares to $6.50 from $5.95. The average on the Street is $7.73.
“There is a solid reward to risk tradeoff for Knight, heading into Q3 with better-than-expected results forecasted and downside support with shares trading near a 52-week low, at 11 times EBITDA with an active NCIB near the $5 level. We see an opportunity to accumulate shares at these levels,” said Mr. Heywood.