Canaccord Genuity Doubles Price Target for Medivation

Health and Healthcare

Published: September 18, 2014 1:55 pm

Last Updated: September 18, 2014 1:56 pm

Medivation Inc. (NASDAQ: MDVN) received an upgrade from Canaccord Genuity on the heels of it continually increasing its 52-week high over the past month. This upgrade comes on analyst John Newman’s estimate that the company’s potential drug sales of Xtandi are undervalued.

The company developed Xtandi for the treatment of metastatic castration-resistant prostate cancer, and it received FDA approval in 2012.

Newman states that, although there is no formal head-to-head trial, Xtandi matches up well against its rival Zytiga, produced by Cadila Pharmaceuticals. Xtandi provides a greater reduction in death, 29% compared to Zytiga’s 21%. Also a reduced risk of radiographic progress or death, by 83% versus 57%. He concludes that Xtandi is a better product and will look to take up more market share as time goes on.

Newman predicts that that potential revenue from Xtandi will be around $4.5 billion in the pre-chemo setting by 2023. The U.S. peak sales alone are estimated at $2.7 billion in the pre-chemo setting.

Medivation has surpassed its highs from February of $88.20 and gradually continues to move up the chart. Thursday it posted its most recent high of $100.48.

Canaccord Genuity upgraded its rating on Medivation to Buy from Hold, as well as more than doubling its price target to $132.00 from the previous target of $60.00.

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The earnings per share estimate for 2014 has been revised to $1.88 from $3.03. The estimate for 2015 has been revised to $0.39 from $1.93 per share.

Annual revenue for 2014 was revised to $632.8 million from $516.3. Revenues for 2015 were revised to $652.0 million from $594.5.

Medivation has a consensus price target of $102.00, and it has a 52-week trading range of $48.15 to $100.48. The market cap for this company is $7.67 billion.

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