Biotech Forum: 4 Notable Morning Analyst Calls

Sometimes even to live is an act of courage.” ― Lucius Annaeus Seneca 

A promising early rally yesterday fizzled.  The NASDAQ ended up down over two percent by the end of Monday.  The SPDR Biotech ETF (XBI) lost three percent to dip its toe in official bear market territory.  Equities have been as good protecting an early lead as the Los Angeles Dodgers so far here in October.

As we all await a horrid month to come to a merciful end, here are four small cap biotech/medical device stocks getting analyst praise this morning.

It has been a busy morning for Eagle Pharmaceuticals (EGRX).  The company announced a major stock buyback today and suffered a minor trial setback as well.  In addition, Cantor Fitzgerald reissued its Buy rating on Eagle with a $80 price target and the following commentary.

Eagle has carved out a leading position in the specialty pharma market, via its 505(B) (2) strategy. We expect upwards earnings revisions to the Street’s current forecasts as the company advances its pipeline and provides date-certain launch timeframes for its pipeline. Valuation Summary We use a blend of DCF and multiples (EV/EBITDA) analysis to get to our 12-month price target of $80."

We will be posting an exclusive 'deep dive' on Eagle to Biotech Forum members before the end of this month.

Nomura Instinet raises its price target on Galapagos (GLPG) from $124 to $140 this morning.  This follows last week's third quarter results and the sale of its partnered-cystic fibrosis program back to AbbVie (ABBV) for $45 million upfront and $200 million in milestones. Nomura's analyst 'views the upfront payments as upside to expectations'.  My personal opinion is Galapagos recent actions make it a more attractive buyout target to its other major partner, Gilead Sciences (GILD).  Just one man's opinion at this point.

Click HERE for your free options report from Investors Alley.

UBS is calling the recent weakness in testing concern Exact Sciences (EXAS) is an attractive entry point.  They reiterated their Buy rating and $100 price target on the stock this morning. UBS' analyst's 'positive thesis is focused on Q4 where he hopes to see a meaningful increase in testing frequency as the result of its strategic relationship with Pfizer (PFE). He views Q3 as less important to his thesis and would view any weakness following the report as a buying opportunity'.

Like most of the small cap space, the stock of Exact Sciences is trading much lower than where it began the month.

Finally, BTIG is maintaining its Buy rating and $61 Orthofix (OFIX) after that company posted third quarter results.  Here is the commentary that came with that rating reissuance.

PT to $61 We maintain our Buy rating on OFIX shares following 3Q18 results which came in slightly ahead of expectations with rev. of $111.7M (+6.6% Y/Y xFx) vs. $110.7M/$110.6M for BTIG/Street. While Spine-Fix (net of Spinal Kinetics) and Biologics continued to drag on overall growth, BioStim and Ex-Fix each benefitted from order boluses lifting results. Accounting for the one-time orders and Spinal Kinetics, we estimate organic growth between 1.0%-1.5% in 3Q18 but viewed in the context of the 2Q18 miss, on a stack basis, combined growth in 2Q18 and 3Q18 was +4.2% Y/Y reported (estimated +1.8% Y/Y organic). Mgmt. narrowed guidance for FY18 and reiterated its commitment to 100bps of adj. EBITDA margin expansion in the organic business even in the midst of restructuring disruptions to the Spine franchise.”

And those are for small cap concerns garnering positive analyst chatter this morning before the bell.

“Humor keeps us alive. Humor and food. Don't forget food. You can go a week without laughing.” ― Joss Whedon

I don't know about you, but in hindsight I wish I had a few more low beta, high yield picks like Chatham Lodging Trust (CLDT) in my portfolio so far this October.  If you are looking for some solid dividend picks to help balance your portfolio, I highly recommend Tim Plaehn.  Tim is an expert on income investing and a friend & colleague of mine at Investors Alley as well as a contributor here on SeekingAlpha. He columns appear on these pages every Monday and Wednesday.  Tim runs the Dividend Hunter newsletter which offers a solid & diverse selection of attractive high yield plays. The service now has over 7,500 active subscribers and can be had HERE for the rock bottom price of $49 (It usually is $99) for the first year.

Thank You & Happy Hunting,

Bret Jensen

Founder, The Biotech Forum, The Busted IPO Forum & The Insiders Forum