Concordia Healthcare Corp. T.CXR.R

The RBC report for April-21-2016

[yycish1027]

RBC target 58USD at that date. 


April 21, 2016 Concordia Healthcare Corp. CXRX Forms Committee to Review Strategic Alternatives & Q1 Preview

Our view: Our fundamental view of Concordia suggests the shares remain undervalued at current levels irrespective of whether a bid materializes (as noted by Bloomberg). Q1 Donnatal TRx, which were below expectations, were partially offset by Lanoxin and Plaquenil strength, underscoring the growing importance of AMCo.

Key points: Committee formed to review strategic alternatives. Concordia announced today that it has formed a special committee of independent members of the board to consider various strategic alternatives potentially available to the company. We do not know if the committee was formed in response to the Bloomberg headline* that indicated Blackstone was considering a bid or was already in place. Management noted that it has had discussions with interested parties, but cautioned that there can be no assurance that any transaction will occur.


Our thoughts on the headlines. Although we have no visibility on whether a bid or some alternative is incoming/under consideration, we continue to believe the shares are fundamentally undervalued, hence our Outperform rating. We note that the peer group is currently trading at ~9.9x 2016 EBITDA versus CXRX at 6.8x. Our target of $58 is calculated utilizing a 9x multiple applied to our 2017 EBITDA of $648MM (consensus $687MM) and a DCF. As such, we understand why suitors could be contemplating a bid for Concordia but we cannot opine on whether a transaction will occur.


Updating Q1/16E and 2016E forecasts to reflect Rx trends in the U.S. business. Our review of YTD TRx trends suggest lower Donnatal revenues partially offset by Lanoxin and Plaquenil AG strength. Our revenue forecast for Q1/16 is now $224.9MM vs. our previously forecasted $228.4MM. We now expect $138.5MM in Adj. EBITDA and forecast Adj. EPS to be $1.38/ sh. Donnatal weakness is likely due to increased competitive pressure in the IBS market (Viberzi launch) plus the revamped salesforce. We have reduced Donnatal revenues by ~$15MM in 2016E, partially offset by stronger Lanoxin AG revenues of ~$5MM and an additional ~$5MM in Plaquenil AG revenues, both increased due to positive script trends. Our AMCo revenues remain unchanged. Total revenue is reduced by ~$1MM in 2016E. Adj. EBITDA for 2016 declines by ~$0.9MM to $606MM and Adj. EPS declines by $0.02 to $6.49.

[Lattice]

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[yycish1027]

Not sure what you meant by obstacles to target. no mention of that in the article. More specific maybe? 

[Lattice]

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[yycish1027]

Here is the section for the Impediments. anyone who is interested in RBC report just PM me, I would send over.  We value Concordia shares by averaging the results of our EV/EBITDA valuation and DCF analysis.   Applying a 9.0x multiple to our 2017E EBITDA forecast of $648.5MM generates a value of $55.72. While we had previously utilized the average of a P/E multiple

[CxrBull]

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[sunshine7]

CRXBULL wrote: "(Letters from Concordia's lawyers are available, will be posted later by someone .........)" ... Now how would you know that unless you are part of the short gang network? The boss hasn't sent you the letters yet? Ha!

[Lattice]

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[Craigbad]

Starting to understand the short position a little better now. Those guys have the script info too. Their main drug is declining heavy and has more competition on the way. They buy Amco as a hail mary to washout declines and overleverage their balance sheet. Now its all on Amco to offset their declines, but Amco already jacked prices just before Concordia bought them so they have a some major

[yycish1027]

Thanks Craigbad for reading my post. I hope this provided some valuable discussion. 

[Craigbad]

Thanks for posting yycish1027, I don't have access to Rbc, but the story is a little clearer now. 

[MichaelSilvia1]

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[Scruggstyle]

The decline in NA revenue in 2015 Q4 was largely a result of supply issues with the company’s contract manufacturer of Plaquenil, which limited CXR’s ability to ship both branded and authorized generic product in the quarter.  In addition, order timing impacted Lanoxin AG as large orders were booked in Q3 followed by a somewhat weaker Q4. TRx data has shown improved Lanoxin AG market

[Lattice]

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[argentia77]

Lattice, I'm disapointed in you. Donnatel is in good company. Aspirin is 150 years old and penicillin at least 90 years old. So if you don't want to get fukt by everyone who sees your silly posts just keep your legs together!  

[Lesalpes29]

Lettuce is again giving us a good argument on Donnatel... Misere good is in on ignore side. 

[Lattice]

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[dudsywow]

Lattice, why does the Donnatal have a 9.6 out of 10 rating at Drugs.com?  You're starting to lose your efficacy.

[Lattice]

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[dudsywow]

What about the rating on drugs.com?

[Lattice]

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[WillyWally]

I love shorts' distortion. When CXR bought Donnatal, the drug was not on FDA's list and was still generating revenues of USD$50M. It was never on the FDA but I love how you try to distort reality. It's like trying to create panic because McDonald's doesn't sell pizzas so Domino will drive them to bankruptcy. 

[Lattice]

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[dudsywow]

https://www.drugs.com/comments/atropine-hyoscyamine-phenobarbital-scopolamine/donnatal-for-irritable-bowel-syndrome.html Don't stop reading just to re-affirm your paradigm.  Also read the comments from users of Donnatal.  It's highly rated by users and it sounds very effective. My comments about your "efficacy" are in relation to your approach on this board.  You

[WillyWally]

What "she's" actually telling us is that she didn't know Donnatal was not FDA approved, she just learned about it now. Wow, some shorts don't even know what the heck they are shorting.

[puma1]

it's up there with her ability to figure out how FX is recorded. STILL WAITING for $GBP 1.53 for every $US 1 i have on account Lattice

[WillyWally]

Yeah this morning Lattice is truly using the weirdest arguments I've seen her/him use so far. A bit like low IQ "Pro"trader but at the other side of the spectrum. I'm sure Lattice can do better than this, maybe some coffee would help?  By the way, based on Lattice's arguments, hundreds of traded companies are worth zero, especially those archaic metal miners selling

[bullchart]

Funny how the herd comes negative after this drops 10.00. Happened many times before and will many more ahead. Rises 10 + bucks= sell a few, falls 10 + bucks= Time to add. 

[Roller007]

It's factored in the price guys. Even if donnatel sales drop 40% and since it accounts for 10% of total Cxr sales, then that's only a 4% drop to the total sales. That brings the SP to the 60s in worst case scenario, not 30s. I read reports from many of the banks that cover Cxr detailing almost every significant drug from amco, the moving parts are very volatile and in constant motion. It

[Scruggstyle]

Script tracking does not pick up the institutional sales.  We will have to wait for Friday results to see the actual sales.

[Lattice]

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[TheRock07]

Its a pretty balanced report, noting some slight weakness in Donnatal in Q1 compensated byincreased strength of lanoxin and plaquenel. Note also that the weakness in donnatal in Q1 will be temporary, as increased detail effort later in Q1 is expected to boost overall donnatal sales in 2016 to $125 million. As I said earlier, there is a strong quarterly pattern in drug sales in the US although

[puma1]

good summary of the RBC but note that it is all predicated on a constant FX number. the shorts must be counting on the FX impact to be more of a 10% drag and so more than the analysts factored into the equation. as well, if the FX is larger than expected - in other words we still meet constant fx guidance - than they will leap on the Brexit vote and suggest another 10% revision downwards in