Mackie Research cuts target price on Medicure

An unexpected issue has Mackie Research Capital analyst Andre Uddin cutting his price target on Medicure (Medicure Stock Quote, Chart, News: TSX:MPH), though the analyst still thinks the stock is a buy.

This morning, Medicure announced it had placed its Prexxartan (valsartan) oral solution project on hold pending the resolution of a dispute between the owner of the new drug application, Carmel Biosciences Inc. and the third party manufacturer of the product.

Uddin says this is an “unexpected” issue, and to be catious he is removing Prexxartan sales estimates out from his model until he get better clarity on this development. But the analyst says there is still plenty to like about the company.

“Even without Prexxartan launch this year, we believe MPH is still in a solid shape,” the analyst says. “MPH should launch Zypitamag on May 1st. At least one of MPH’s three cardiovascular ANDAs should be approved and commercialized in 2018. MPH has a clean balance sheet with zero debt and a strong cash position, which should enable the company to acquire/in-license additional products.”

In a research update to clients today, Uddin maintained his “Buy” rating, but lowered his one-year target price on Medicure from $12.50 to $9.80, implying a return of 38 per cent at the time of publication.

Uddin now thinks Medicure will generate EBITDA of $35.5-million on revenue of $46.0-million in fiscal 2018. He expects those numbers will improve to EBITDA of $65.4-million on a topline of $78.9-million the following year.