This fund manager loves Apotex Health

J Zechner Associates chairman and founder John Zechner says Apotex Health (Apotex HEalth Stock Quote, Chart, News, Analysts, Financials TSX:APTX) is a rare institutional-quality Canadian healthcare company.

Speaking on BNN Bloomberg’s Market Call on Sept. 23, Zechner said he first looked at Apotex after its IPO and found a profitable business with strong cash flow.

The investor noted that Apotex had a market capitalization of about $10-billion at the time and was generating more than $1.5-billion of operating cash flow.

“It’s just a really good business on the generics,” Zechner said.

The portfolio manager  said the private equity owners that bought Apotex have improved the business, expanding it beyond generics into molecules, biologics and pharmaceuticals.

Zechner pointed out that Apotex also has the only generic GLP-1 drug in Canada, which it is preparing to roll out.

He said the valuation remains low and the company could attract institutional interest because Canada has lacked a large-cap healthcare stock for years.

“It’s a legitimate large-cap play in a growth sector,” Zechner said.

He said Apotex has a clean business, high margins and strong cash flow.

Zechner said a recent secondary sale put some pressure on the stock, but he views the company as a good long-term holding.

Of the analysts covering Apotex, 13 rate it “Buy,” none rate it “Hold” and none rate it “Sell,” with a consensus target of $41.22.

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