Medexus keeps $2.00 target at Raymond James

Its Q4 results are in the books and Raymond James analyst Rahul Sarugaser still thinks there is a little money to be made on Medexus Pharmaceuticals (Medexus Pharmaceuticals Stock Quote, Chart, News, Analysts, Financials TSX:MDP).

On June 25, MDP reported its Q4 and fiscal 2024 results. In 2024, the company posted Adjusted EBITDA of $19.5-million on revenue of $113.1-million, a topline that was up 4.6%, year-over-year.

“We are thrilled with Medexus’s performance over fiscal year 2024, with full-year revenue, operating income, and Adjusted EBITDA* each achieving company records,” CEO Ken d’Entremont sid. “We responded swiftly to the trends affecting our business, particularly IXINITY and Rasuvo, and we are pleased with initial progress of our ongoing expense management initiative, which is reflected in our financial results for fiscal Q4 2024. This establishes a solid foundation for us to manage the future needs of the business, including any commercial launch of treosulfan in the United States.”

The analyst said the quarter was a mixed bag.

“MDP’s 4Q24 revenue, adj. EBITDA, and NI each showed modest Q/Q growth, which supported record FY24 revenue and adj. EBITDA results, coming in at $113.1 mln and $19.5 mln, respectively,” he wrote. “MDP’s FY24 came with its fair share of action, including a very strong start to the year on the top-line (1Q and 2Q both >$30 mln), a relatively sharp 2H24 revenue step-down driven by IXINITY and Rasuvo market/price weakness (note), plenty of speculation around MDP’s capacity to repay its expiring converts without massive dilution (note), the ultimate repayment-in-full of those converts with the help of a $10 mln bought deal (note), and the approval of MDP’s sBLA for IXINITY in pediatric patients (PR). Heading into FY25, MDP finds itself with a relatively stable (much less precarious) balance sheet situation, a solid base business (generating cash enough to pay down its current debt on a predetermined amortization schedule), and, crucially, on the brink of bringing topical terbinafine to the Canadian market (approval expected before CYE24), and the big (and crucial) binary of treosulfan’s FDA review, which should conclude before Oct. 30, 2024. We estimate US treosulfan sales could boost MDP’s topline 70% by 2030.”

In a research update to clients June 26, Sarugaser maintained his “Market Perform 3” rating and $2.00 price target on MDP.

The analyst thinks the company will post EBITDA of $15.0-million on revenue of $112.0-million in fiscal 2025.

“We update our Rev. estimates and now value MDP as a multiple of EV/EBITDA (was SOTP including DCF of base business plus rNPV of treosulfan U.S. sales),” Sarugaser added. “Using a 5.5x multiple of CY24 EV/EBITDA, a discount to Canada-based speciality pharmaceutical peers (accounting for approval risk and competitive/price pressures), we calculate a value of CA$2.07/sh (Exhibit 2), which we round for our PT of $2.00/sh. We maintain our Market Perform rating.”