Alexion Pharma Brexit Selloff Creates An Entry Point: Trading At 'Dark-Sky' Valuation

Since the United Kingdom voted to leave the European Union, Alexion Pharmaceuticals, Inc. ALXN's share price has dropped 10.77 percent.

Citi's Take

Citibank's Robyn Karnauskas upgraded Alexion Pharmaceuticals to Buy without changing her $154.00 price target, seeing Brexit as a "good entry point." Contrary to market perception, Karnauskas believes there will be no impact due to recent currency movements. Furthermore, the "current valuation assumes [the] worst for the stock."

Company Hedging Efforts

Part of Alexion's relative neutrality relied on the company's hedging strategy. "Even a big 10 percent adverse move in the currency would affect bottom-line by only 1.6 percent in that year," stated the analyst. Due to Alexion's relative FX neutrality Alexion's recent $11.00 drop "would make sense only if all global currencies moved down >15 percent vs USD," claimed the analyst.

Trading at 'Dark-Sky' Valuation

At the time of writing, Alexion traded below Karnauskas' "Dark-Sky" valuation of $122.00, which assumes "25 percent-volume/35 percent-price erosion due to biosimilar/completion and No-pipeline." Pipeline clarity in the next 6–12 months "should provide upside" to Alexion, said the analyst.

According to TipRanks.com, Karnauskas was among the better analysts covering Alexion having a success rate of 52 percent with an average rate of return per recommendation of +4.8 percent. The analyst is ranked 541 of 3,980 analysts.

At the time of writing, Alexion traded at $111.81, down 1.04 percent Monday.