On Thursday, Piper Sandler increased its price target for Amneal Pharmaceuticals (NYSE:NASDAQ:AMRX) shares from $6.00 to $8.00, while keeping an Overweight rating. The adjustment follows a reassessment of the company's business strategy, which now places less emphasis on its oral solid generics segment and more on its growing injectables and biosimilars divisions.
The firm noted that the evolving product mix, which includes a larger share of generic injectables, biosimilars, and specialty brands, provides a more stable revenue outlook. This shift is expected to lead to further expansion of the company's market multiple, currently estimated at around 7 times the enterprise value to 2024 estimated EBITDA, based on management's 2024 guidance range of $2.55 billion to $2.65 billion.
The analyst expressed confidence in the sustainability of Amneal's EBITDA, given the reduced exposure to the more volatile oral solid generics market. The belief is that the company's focus on areas with limited top-line pressure will translate into continued value creation for shareholders.
Piper Sandler also pointed out that Amneal's balance sheet is showing signs of improvement. This financial strengthening, combined with the company's strategic shift towards a more diversified and resilient product portfolio, underpins the rationale for the increased price target.
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