Raymond James Initiate CoverageAnd are looking for 70% SP appreciation. GLTA
For the first time since its initial public offering, DRI Healthcare Trust has “in place a foundation primed for growth,” according to Raymond James analyst Rahul Sarugaser
“We see DRI’s work to complete the replacement of its mature/expiring cash flows as a significant achievement and a material derisking event,” he said. “We believe the market asymmetry identified here presents a solid near-term entry point.”
Seeing the Toronto-based DRI “primed for growth,” Mr. Sarugaser initiated coverage with an “outperform” recommendation on Tuesday.
“We identify a wide market asymmetry between DRI’s stock price and its current NAV (more than $10 per share),” he said. “Further, as the Trust executes the $300-million in incremental transactions it has guided to during 2023-2025 — producing a robust calculable series of future cash receipts — we expect its valuation should correct toward our target.
“During the last 10 years, there has been a rapid expansion in the number of biotech companies created and launched onto the public markets (2013-2022: more than 500 IPOs; 2003-2012: approximately100 IPOs), which has played a key part in driving the escalation of novel drug approvals by the U.S. FDA during the last half-decade or so. During the same period, global R&D spend has grown substantially (more than 7-per-cent CAGR 2014-2021), and is expected to continue its upward trajectory, with $4-trillion in R&D spend forecasted across the biopharma ecosystem during the next decade. The growing capital needs of the biopharma ecosystem, the growing number of recently-approved therapies, and today’s challenging equity capital market backdrop for biotech companies creates an ideal environment for non-dilutive royalty financing, in our view.”
He set a target of $13.50. The average is $15.34.