Mackie ups Knight Therapeutics to buy; PT to $10.80 from $8.20

Knight Therapeutics

Mackie Research Capital upgraded Knight Therapeutics (TSX:GUD) to “buy” from “hold” and raised its price target to $10.80 from $8.20 after Knight’s planned acquisition of Grupo Biotoscana for $369-million (Canadian). The stock closed at $8.72 on Oct. 22.

Analyst André Uddin writes that the “transformative acquisition done at a reasonable price” should appease dissident shareholder, Madsen Biotech.

Mr. Uddin said Grupo has some strong Latin American marketing partnerships with Celgene (now Bristol Myers Squibb), Basilea Pharmaceuticals, Gilead, Eisai, Pierre Fabre, and CSL Behring. Grupo’s primary disease focus includes oncology, onco-hematology, infectious diseases, as well as, other specialty areas such as branded generics.

He estimated Grupo would generate sales of $299-million in 2020, gradually increasing to $356-million in 2023. Grupo had a 48% gross margin in the second quarter of 2019.

“Knight remains well funded with over $250-million in cash to continue its business development plans,” he added.