Mackie Research lowers price target on Medicure, maintains buy

The sale of Apicore was a “nice quick flip” for Medicure (Medicure Stock Quote, Chart, News: TSX:MPH), but it is not enough to prevent Mackie Research Capital analyst Andre Uddin from lowering his price target on the stock.

This morning, Medicure announced it had sold Apicore to an unnamed pharmaceutical company for approximately (U.S.)$105-million.

“We are very pleased with our return on investment in Apicore,” said CEO Dr. Albert D. Friesen. “The company intends to use the proceeds from the sale to retire its approximately $61-million long-term debt, pay the required debt prepayment fees, pursue the acquisition of additional commercial cardiovascular products and further advance its product development pipeline.”

Uddin says the sale of Apicore has caused him to reduce his target from $13.40 to $12.00, but notes that this was a very deft move by the company.

“The sale represents an 82% return (MPH used a total of US$57.75M cash and debt to initially acquire Apicore),” the analyst notes. “MPH is receiving a total of US$105M (via 2 payments) and is also eligible for undisclosed contingent milestones. MPH is going to use the proceeds to fully repay its approx. C$61M long-term debt and to fund potential product acquisitions.”

Uddin thinks Medicure will generate fully diluted earnings of $0.06 a share in fiscal 2017. He thinks those numbers will improve to earnings of $0.94 on a topline of $39.1-million the following year.