Amneal Analyst: Pharma Well-Positioned Ahead Of 2021 Generic Launches

As part of its outlook for biopharma companies in 2021, Guggenheim Securities turned bullish on Amneal Pharmaceuticals Inc AMRX.

The Amneal Analyst: Dana Flanders upgraded Amneal from Neutral to Buy with a $5.50 price target. 

The Amneal Thesis: Revenue and margin performance from Amneal's generics business has been strong in 2020, buoyed by the return of Chirag and Chintu Patel as co-CEOs, Flanders said in a Monday note.

Amneal is poised to a see a reasonably strong generic launch year in 2021, with seven targeted complex launches, along with potential stability in a generic version of Merck & Co., Inc.'s MRK hormonal contraceptive NuvaRing, and growth in generic Lidoderm, the analyst said.

These two generics will likely help offset the negative impact of Carafate competition, he said.

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Generics growth will track around the mid-single digits, with gross margins expected to improve by about 100 basis points, Flanders said. 

AvKare will likely benefit from annualized contribution and base business growth, while Rytary and Unithroid should see continued double-digit growth offset by a mid-2021 Zomig loss of exclusivity, the analyst said.

For 2021, Guggenheim expects revenues of $2.113 billion and adjusted EBITDA of $510 million, higher than the consensus estimates of $2.046 billion and $485 million, respectively.

"While the generics space remains fundamentally challenged, we believe the backdrop is improving, and we view AMRX (trading at ~7.3x 2021 EV/EBITDA) as well positioned relative to peers," the firm said.

AMRX Price Action: At last check, Amneal shares were rallying 6.39% to $4.33.

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