Specialty pharmaceutical company Pernix Therapeutics Holdings’ (PTX) shares took a hit yesterday on Cantor Fitzgerald’s downgrade; GeoInvesting used this event as an opportunity to buy additional shares at depressed prices.  Yesterday via a premium tweet we stated:

“Nibbling shares of $PTX on pullback which could be due to anticipation of offering to help finance recent acquisition.”

In our March 5, 2015 e-mail, we stated that we had begun to nibble at shares of PTX based on strong  growth prospects for 2015 and 2016.  On March 10, 2015, PTX announced an agreement to acquire  Zohydro ER franchise from Zogenix, Inc. (ZGNX). The acquisition includes three extended release hydrocodone products, including an abuse-deterrent pipeline and all related intellectual property.

Downgrade of Pernix by Cantor Fitzgerald to “Hold”

Shares fell sharply yesterday, likely on the downgrade by Cantor Fitzgerald to “Hold” and a lowered price target to $11 from $12. The Cantor Fitzgerald report shows EPS estimates of $0.65 and $1.49 for 2015 and 2016, respectively.  While several analyst reports are showing strong 2016 estimates of between $1.40 to $1.60, the dilutive impact on 2015 is in question.  Consensus 2015 EPS estimates seem to have been adjusted from $0.92 to $0.83, which while lowered, are much higher than the Cantor report’s estimates.

We also noticed that JMP securities has raised its price target to $15, post acquisition announcement. We are performing our due diligence to fully digest the impact the recent acquisition will have on 2015 EPS.

To see the remainder of PTX coverage, please go here.

 


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