Monday, 7 April 2014

Shire Pharmaceuticals Shares Got To £40/share

Our base-case scenario is conservative, accommodating a potential structural slowdown of the US ADHD market, competition/pricing pressure in Orphan- drugs, and Lialda generics from 2016. This results in 2014E sales/EPS growth of 17/26% and a more modest 2014-19e CAGR of 3/7%, though we note the current business would generate double-digit EPS under more positive scenarios. We forecast sales falling from >$7bn in 2022, to $4bn in 2025, reflecting Vyvanse patent expiry and a peak pipeline contribution of $1.2bn. Given expense flexibility we see sustainable non-GAAP EBITDA margins of 40- 50%. These assumptions support a ‘stand-still’ NPV valuation of £25 (WACC 7.5%, g = 0%), a bull-bear range £40-20, and excess cash generation >$20bn. Our new EPS are 3% ahead of consensus near-term but 6-7% below in 2016/17, reflecting our conservative assumptions. Our web-based Interactive Modeling Tool offers the ability to flex key assumptions.

No comments:

Post a Comment