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Akorn: Deutsche upgrades, says selloff overdone

Published 11/07/2016, 02:27 PM
Akorn: Deutsche upgrades, says selloff overdone
DBKGn
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AKRXQ
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  • Deutsche Bank (DE:DBKGn) upgrades Akorn (NASDAQ:AKRX) to Buy from Hold. PT remains $28. Implied upside 38%.
  • "AKRX shares are down 20% since 11/3, when the company reported 3Q results and news emerged about a DOJ investigation into suspected price collusion involving generic companies that could result in charges by year-end.
  • "The quarter itself was decent, although AKRX announced that FDA clearance of its Decatur injectables facility will require a re-inspection, the timing of which is uncertain.
  • "Unlike other generic stocks, AKRX shares have not begun to recover since 11/3, which we believe could be tied to concerns about Decatur on top of generic industry risks. Given management’s confidence that clearing Decatur is a when not an if, we like the set up for the stock from here, and are moving to a Buy rating... We also believe that management is shareholder friendly and is doing the right things to position AKRX for long-term value creation. An under-levered balance sheet (net debt/EBITDA of ~1.3x) creates some optionality as well."

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