Knight Therapeutics wins target raise at RBC

Following a notable acquisition, RBC analyst Douglas Miehm has raised his price target on Knight Therapeutics (Knight Therapeutics Stock Quote, Chart, News, Analysts, Financials TSX:GUD).

On March 11, GUD announced that it had agreed to acquire the assets of Paladin Pharma for $120-million.

“The reunion of Paladin and Knight, two companies dear to me, is both financially attractive and personally gratifying,” said Jonathan Ross Goodman, executive chairman of the board of directors of Knight Therapeutics and co-founder of Paladin.

“The acquired portfolio is extremely diversified, comprising over 40 products,” the analyst wrote. “The majority of the revenues are generated by mature, owned products, most of which have already lost exclusivity. Management anticipates these to experience a small decline. However, this decline is expected to be offset by growth from the in-licensed promoted assets, which are very early in their launch phase, resulting in flat revenues over the next couple of years, per management. While the company did not provide details on the margins of the acquired portfolio, management indicated that the EBITDA margins are expected to be similar to those of the rest of Knight’s business, with potential synergies anticipated in 2026 and beyond. Assuming EBITDA margins of 16 per cent, in line with 2024 company guidance, would imply an EBITDA of $11-million for the acquired portfolio. Using an EV of $100-million ($120-million less $20 million for inventory), we estimate a transaction multiple of 1.4 times EV/Revenue and 8.9 times EV/EBITDA.”

As reported by The Globe and Mail, Miehm March 12 maintained his “Outperform” rating on GUD while raising his price target from $7.00 to $8.00.