Concordia Healthcare’s 2016 guidance is positive but secondary, says Laurentian

New guidance numbers from Concordia Healthcare (Condordia Healthcare Stock Quote, Chart, News: TSX:CXR, Nasdaq:CXRX) are a positive, but they are overshadowed by ongoing industry turmoil, says Laurentian Bank Securities analyst Joseph Walewicz.

This morning, Concordia released preliminary guidance for fiscal 2016. The company says it expects to post adjusted net income of (U.S.) $330-million to $355-million, or adjusted EPS of (U.S.) $6.29 to $6.77. The company said it thinks revenue will come in at (U.S.) $1.02-billion to $1.06-billion.

“Today marks the beginning of the next stage of the evolution of Concordia,” said CEO Mark Thompson. “With the provision of 2016 guidance, we look forward to continuing to provide our shareholders with meaningful information with respect to the future trajectory of our business.”

Walewicz notes that the company’s projected revenue and adjusted EBITDA are above his previous forecast and consensus estimates. But the analyst says macro issues continue to dominate the picture for Concordia and its peers.

“While these guidance numbers are positive, the larger issues affecting the pharmaceutical sector may continue to overshadow company specific news in the near term, and news on Valeant Pharmaceuticals and the broader sector may continue to drive (Concordia Healthcare’s) stock,” he said.

Last Wednesday, Thompson appeared on BNN to defend his company, which he said he feels was being unfairly swept up in the Valeant/Turing soap opera.

“I think there is a fair bit of guilt by association which I think is completely unwarranted, he said. “We have a very different business model than both Valeant and Turing. We have a model that doesn’t rely on taking geometric price increases. We also have a model that buys products. Were not like Valeant, who buys companies and tries to find synergies and strip them down.”

In a research update to clients today, Walewicz maintained his “Buy” rating on Concordia Healthcare, while continuing to place his price target under review. The analyst says he will update his target price with the consideration of the substantial decline and volatility in peer group multiples.

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