Cost savings initiatives at Cipher Pharmaceuticals (Cipher Pharmaceuticals Stock Quote, Chart, News: TSX:CPH) are getting the thumbs up from Laurentian Bank Securities analyst Joseph Walewicz.
On November 29, Cipher announced that it had decided to voluntarily delist its shares from the Nasdaq, as part of a larger decision to cut costs.
“Consistent with our commitment to increasing profitability and driving shareholder value, our board concluded that eliminating these significant expenses outweighed the benefits of maintaining the U.S. listing at this point,” said interim CEO Stephen L. Lemieux. “The TSX has been our primary market and represents a higher percentage of our trading volume.”
Walewicz says the overall savings that Cipher could realize through the totality of its actions around cost savings could be significant.
“While Cipher has completed the first two objectives of its strategic review (Board changes and a review of management), it continues to progress on its cost-saving objective,” he says. “We estimate the annual savings from the delisting to be ~C$1 million and we expect additional expense reductions in 2017 as management completes its review of the U.S. dermatology business. A divestiture or a scaling back of the operation would substantially improve profitability – investors should note that the company was profitable, and had EBITDA of >$19M, prior to the U.S. expansion.”
In a research update to clients today, Walewicz maintained his “Buy” rating on Cipher Pharmaceuticals but moved his one-year price target on the stock from (U.S) $6.00 to (C) $8.00.
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