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Clinigen Group set for 77% upside according to RBC Capital

Published: 10:21 15 Oct 2018 EDT

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RBC has a 1,470p price target

Clinigen Group PLC (LON:CLIN) shares could see some 77% upside to the current price, that’s according to RBC Capital, which rates the London listed life science company as a ‘top pick’.

RBC has a 1,470p price target, compared to the current price of around 830.3p.

“We believe acquisitions have positioned Clinigen as the No. 1 player in the ‘ethical’ supply of medications and, alongside existing products, this should lead to strong cash flow generation over the coming 5 years,” RBC analyst Nick Keher said in a note.

“With management aiming to double the number of products under its control and with the business model enhancing its product acquisition pipeline, we see this goal as likely.

READ: Clinigen raises £80mln to fund two new acquisitions

“We see further product acquisitions enhancing margins and promoting even faster earnings growth.”

Keher highlighted that further acquisitions are likely due to the company’s growing cash position and its desire to build a portfolio of ten products – and, such deals would represent a potential value catalyst for Clinigen shares.

Other possible catalysts identified by RBC include programme wins in the group’s Unlicensed Medicines division and/or upgrades created by the Quantum Pharma and CSM acquisitions.

“Clinigen trades at a material discount to its peer group but we think this discount will unwind as organic growth rates improve in FY19E,” the analyst said.

He added: “Our upside scenario values Clinigen at 1740p per share and is based upon the successful integration of recent acquisitions plus a return to growth of the CST and Unlicensed Medicines business, leading to forecast certainty and potential earnings upgrades.

“In such a scenario, we think Clinigen would hold a premium rating (c25x EPS) which we would apply to our FY20E estimates.”

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