Lannett Making Progress With Pipeline, Cost Savings: BMO

Lannett Company, Inc. LCI 0.35% reported solid second-quarter results Wednesday and raised its 2019 guidance.

The pharma company is making good progress in preparing for the loss of levothyroxine with new launches and cost-cutting initiatives, according to BMO Capital Markets.

The Analyst

BMO Capital Markets’ Gary Nachman maintained a Market Perform rating on Lannett and raised the price target from $7 to $10.

The Thesis

Lannett reported Q2 revenue of $194 million, convincingly beating the consensus expectation of $161 million. The company’s EPS came in at 86 cents, significantly higher than the 67-cent Street estimate.

The upside was driven by levothyroxine, as the company recorded a part of the $50-million margin pre-payment from Amneal Pharmaceuticals Inc AMRX 2.1% in the quarter, Nachmansaid in a Wednesday note.

Lannett is preparing for levothyroxine’s transition and is executing well on new launches, the analyst said. The company already announced 17 launches in 2018 that generated $40 million in the first half of fiscal 2019. These should contribute $75 million for the full year, he said.

Another 20 launches are being targeted annually, with a pipeline of 60 products at different stages of development, Nachman said.

Lannett expects 10 launches in the first half of 2019 to contribute $10 million for the second half, and a total of 20 launches in 2019 to contribute $75 million in the full year, according to BMO.

The company has made good progress on cost curtailment, with annualized net savings of $33 million expected by the close of 2020, Nachman said. This gives the company more flexibility to take care of debt while pursuing various business development opportunities, he said.

https://www.benzinga.com/analyst-ratings/analyst-color/19/02/13120111/bmo-capital-markets-lannett-making-progress-with-pipeli