Zachs calls Cipher significantly undervalued

A discounted cash flow analysis by Zachs Investment Research values the shares of Cipher Pharmaceuticals (TSX:DND; OTCBB: CPHMF) at $3 a share. The stock is trading at $1.48 Wednesday afternoon.

“Our model … shows that operating cash flow should turn positive in 2013 on a sustained basis,” writes analyst Jason Napodano, who rates Cipher as a “buy.”

By the end of 2012, Cipher will be collecting revenues from three approved products in the U.S., with a growing cash balance of over $14-million in the bank, no debt, and generating positive cash flow.

Mr. Napodano said approval of Absorica is “transformational” for Cipher and represents the clear opportunity to in-license yet another 505(b)(2)-like product for late-stage development and commercialization in 2013.

“Cipher is now three-for-three,” he said. “It’s time for U.S. investors to take notice. This is a stock to own.”