Strong Earnings Could Mean Buying Spree For Alexion Pharmaceuticals Inc., Says Analyst

Published: Oct 24, 2014

Strong Earnings Could Mean Buying Spree For Alexion, Says Analyst

October 24, 2014

By Riley McDermid, Breaking News Sr. Editor

Biotech firm Alexion Pharmaceuticals Inc. showed positive third quarter results that have some analysts becoming bullish on the stock as speculation continues that the firm might make some strategic acquisitions on the strength of its earnings, said an analyst Friday.

Alexion saw its share price leap 7.1 percent this week after it reported profit of $1.27 a share, well above analyst forecasts for $1.15. Alexion also raised its full-year guidance to between $5.15 and $5.20 a share, a sharp gain from the consensus range of $4.95 to $5.05.

Geoffrey Porges, a biotech analyst at Sanford Bernstein, said that Alexion reported strong third results that were well received by investors. He remains optimistic about Alexion and has maintained the firm’s outperform rating on the stock and a target price of $218.

“We still think there is further opportunity ahead for this stock, and raise our revenue forecasts by 1 to 3 percent and our EPS estimates by 1 to 5 percent and remain well above consensus,” he wrote in a note to investors.

Alexion’s existing drug pipeline also continues to show promise, with particularly strong results expected for the company’s flagship product, Asfotase, which was granted “orphan” drug status in September to treat perinatal-, infantile- and juvenile-onset forms of hypophosphatasia (HPP).

HPP is an inherited, life-threatening, ultra-rare metabolic disorder that leads to progressive damage to multiple vital organs, including destruction and deformity of bones.

“We see positive newsflow coming from the Asfotase approvals in H1 2015, and also look to continued growth of Soliris, as well as steady margin improvement, to provide upside,” said Porges.

“Alexion's stock has recently caught up with peer large cap biotechs but should deliver more upside as they expand their portfolio of indications and medicines in 2015 and 2016,” he concluded. “They have potential for further bolt-on acquisitions of rare disease assets.”

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