Credit Suisse Raises Salix Pharmaceuticals Price Target
Credit Suisse raised its price target on Salix Pharmaceuticals, Ltd. (NASDAQ: SLXP) from $111 to $121 and maintained a Neutral rating.
Analysts led by Ronak H. Shah saw “early drawdown of inventory as a positive as it returns focus to the base business earlier. We think the new 2016 EPS guidance is achievable, but think the top-line might be a stretch on an ex-IBS-D basis.
“Longer-term, we see upside to SLXP gross margins given increasing contribution of Xifaxan, but continue to view level of SG&A spend required as underappreciated. We see modestly favorable risk/reward on SLXP, but reiterate our Neutral view ahead of Audit Committee findings.”
Shah noted that “consensus 2017 EPS estimates (first year normalized EPS with full tax rate) are unclear, but are likely to be in the ~$8.5-9 range. Discounting back to 2015 (at 8.5 percent rate), we get ~$7.50 EPS, implying a ~15x multiple based on where the stock is currently trading at (~$114). Given SLXP's attractive post-2015 growth profile (~28 percent 5-year CAGR), we think this multiple could meaningfully expand post Audit Committee disclosures (we see timing likely prior to 4Q earnings in February) and Xifaxan's IBS-D approval and launch (May '15).”
“We see modestly favorable risk/reward on the name but stay on the sidelines ahead of the Audit Committee disclosures. Our TP is a blend of 75/25 percent DCF/PE (DCF at $119 with 8.5 percent WACC and 1 percent terminal value; PE at $129 with 18x discounted 2017 EPS),” the note concluded.
Salix Pharmaceuticals recently traded at $116.36, up 1.63 percent.
Latest Ratings for SLXP
Dec 2014 | Credit Suisse | Maintains | Neutral | |
Dec 2014 | Jefferies | Maintains | Buy | |
Nov 2014 | Credit Suisse | Maintains | Neutral |
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