Piper Jaffray Reiterates Overweight Rating on Impax Laboratories (IPXL)

Piper Jaffray is out with a research report this morning, where it reiterates its Overweight rating on Impax Laboratories IPXL; it also has a $26.00 price target on the stock. The PJ analysts said, “We are lowering our 2Q10 estimates for Impax to better reflect market share trends for its Adderall XR (AXR) generic as well as increased competition/pricing pressure on generic Flomax. That said, we continue to believe 2Q upside relative to the Street is realistic (our new EPS estimate is $0.73, versus the Street estimate of $0.50). More importantly, IPXL's net cash position (near $350M by year-end and $500M by the end of 2011, on a market cap of only $1.1B), deep generics pipeline and emerging brand business (IPX-066 in Parkinson's) provide ample foundation for long-term value creation. As such, we would buy IPXL on the recent weakness.” They added, “Though there has been much anxiety over 2Q, the long-term picture is bright. IPXL should have over $5 in net cash per share on hand by year-end and near $8 per share by the end of 2011. IPXL is approaching 20 disclosed generic filings, with a number being first-to-file opportunities that encompass over $1B in brand sales. The lack of visibility on the timing of generic launches (Opana ER being the exception, launching in 2013) has resulted in the market ascribing little value to what could be significant opportunities. Lastly, IPX-066, IPXL's controlled-release levodopa formulation for Parkinson's, has the potential to be a transformational (i.e, high-margin brand) product. We will see Phase III data next year.” The PJ analysts closed by saying, “In our view, IPXL is one of the most attractive opportunities in the generics space. Our PT of $26 is based on our 2012 EPS estimate of $2.16, times a P/E of 13x, discounted at 12%.”