Knight Therapeutics is a buy, says Paradigm’s Sarugaser

A new analyst covering Knight Therapeutics (Knight Therapeutics Stock Quote, Chart, News: TSX:GUD) at Paradigm Capital brings a buy rating and new price target.

Paradigm analyst Rahul Sarugaser resumed the firm’s coverage of Knight with a “Buy” rating and a one-year price target of $10.75, implying a return of 6 per cent at the time of publication.

In a research report to clients today, Sarugaser listed the reasons he has a “positive bias” towards Knight, not the least of which is the giant pile of cash it is currently sitting on.

“After a series of successful financings in 2016, Knight now sits atop $650M in uncommitted cash,” notes the analyst. “The company’s leadership has reiterated its long-term view, and we believe it will build a prolific pipeline through a strategy of investing in and acquiring value companies.”

Sarugaser says positive highlights for Knight include the low risk loans it has made to other biopharma companies at 12-15 per cent returns, the cash it has invested in biotech funds and in the specialty pharma space, and its acquisition of other specialty pharma players.

Sarugaser thinks Knight will post EBITDA of negative $200,000 on revenue of $16-million in fiscal 2017. He expects these numbers will improve to EBITDA of $11.4-million on a topline of $30.4-million the following year.