Merrill Lynch is pounding the table hard on MEDI today. They wrote a report entitled "Medimmune-The train is leavin the station". Here are the highlights.
Price: $28 3/4
Investment Highlights:
ú Following recent discussions with
management, we are increasing our 1997-2001
EPS estimates from d$1.89, d$0.76, $0.22,
$1.75, and $2.54 to d$1.50, d$0.30, $0.70,
$2.05, and $3.00.
ú Our one year price objective is increased from
$36 to $43 per share, based upon a 30 multiple
and 25% discount rate applied to our new
2001 EPS estimate.
ú The estimate changes are driven by increased
estimates of royalties and milestone payments,
tighter cost structure, and the year 2001
introduction of MEDI-507 into our model.
Fundamental Highlights:
ú MEDI-493 is expected to be filed with the
FDA in 4Q97, and an advisory panel could be
scheduled for 1Q98. We expect an expedited
review and approval by September 1998 - in
time for the 1998-99 RSV season.
ú The company is engaged in partnering
discussions in Europe regarding MEDI-493
and their vaccine pipeline.
ú We are adding MEDI-507 to our model due to
interesting data in "graft versus host disease".
MedImmune Inc.
The Train is Leaving the Station BUY*
Long Term
BUY Reason for Report: Estimate Changes
MedImmune Inc. - 18 September 1997
Raising Estimates
We are significantly increasing our sales and earnings
estimates for MedImmune following recent discussions
with management. Our new estimates put us significantly
higher than The Street, and our DCF model implies a
present value for MedImmune shares north of $40. We
view the company's current operations and outlook as
fundamentally strong, and the stock as significantly
undervalued. The recent upswing in biotech valuations
only increases our conviction of significant relative value.
New changes to our model include:
ú The addition of MEDI-507 into our long term model
for the treatment of Graft Versus Host Disease
(GVHD). We have a year 2001 sales estimate of $25
million.
ú We have increased 1998 MEDI-493 sales to $35
million from $5 million and decreased Respigam sales
for 1998 from $47 million to $32 million. The net
sales estimate increase is $15 million.
ú Increased Cytogam sales growth for 1997-2001 from
10% to 12%.
ú Slightly lower R&D and SG&A costs for 1999-2001.
ú Increased milestone, royalty and research revenues for
1997-2001. We now expect the company to receive a
payment in 4Q97 for a European marketing agreement
for MEDI-493.
We retain a $225 million US estimate for MEDI-493, and
$100 million international estimate. The worldwide
estimate of $325 million for MEDI-493 suggests that the
current $800 million market value for the company is not
only a discount for the value of the drug, but also does not
value the company's other marketed products, fixed assets,
or pipeline. In our opinion, a more appropriate value for
the company would exceed $1.2 billion, or $40-$45 per
share.
We believe the shares are attractive for purchase. |
