Keep Knight Therapeutics management as is, Paradigm Capital says

Knight shareholders are reportedly to be voting on May 7 on whether to retain the current set up or to choose directors nominated by activist investor Medison Biotech and its CEO Meir Jakobsohn, owners of a 7.3 per cent stake in Knight who are looking to oust Goodman.

In a research note to clients on Friday, Sarugaser puts his faith in Goodman.

“GUD has almost $800 million in cash, which represents a juicy prize for Mr. Jakobsohn and his coterie, so we are not surprised that he is fighting hard to access it. Meanwhile, GUD’s management —Mr. Goodman and team— have been consistently performing to our expectations during the two years we have been covering the company.”

“GUD’s weak stock performance of late, we think, can be attributed to its disciplined approach to deploying cash—preferring to wait out the expensive sellers’ market that is Specialty Pharma today—and building its cash reserves so it can pounce when the market starts to ease, likely in 2020. Therefore, we reiterate our thesis on GUD: with its strong balance sheet and eye for good M&A deals, a strategy in which we see long-term value, we view GUD as a solid investment for investors with a (very) long view,” says Sarugaser.

The analyst is reiterating his “Hold” rating and 12-month target of $9.00, which represented a projected return of 21 per cent at the time of publication.