Patheon N.V. (NYSE: PTHN) saw its quiet period come to an end on Monday, and the analyst floodgates opened wide. Many calls were made on Monday, but Tuesday brought follow-on calls from other analysts who work for firms that were in the underwriting syndicate. What stood out so much here was that the analyst ratings seem universally positive. To complicate matters a bit, the actual price targets are all calling for upside on top of the upside that has already been seen.

Patheon is based in the Netherlands and is in outsourced pharmaceutical development and manufacturing (CDMO) services. It provides a range of active pharmaceutical ingredient and finished drug product services. These range from formulation development to clinical and commercial-scale manufacturing, packaging and lifecycle management. Patheon’s segments include the following: Drug Substance Services, Pharmaceutical Development Services, Drug Product Services and DPx Fine Chemicals.

Before getting into the analyst summaries, it is important to realize what happened here in its July 21 IPO. Patheon priced 29.8 million shares at $21 per share, but its stock never went back down to the IPO price. This stock has had a post-IPO range of $24.11 to $28.09, and shares were trading at $27.60 on last look.

Wells Fargo started it as Outperform with a valuation range of $31 to $34. The Wells Fargo report said:

We believe Patheon can drive 20%+ EPS growth for several years by being levered to favorable trends, by driving operational efficiency, and by executing on prudent capital deployment. We also believe Patheon benefits from a forward-thinking management team with proven experience executing transformative strategies.

Jefferies initiated coverage of Patheon with a Buy rating and a $32 price target. The firm believes its platform will yield higher growth. The report said:

Patheon has developed the broadest set of CDMO services through an inorganic growth strategy. That business portfolio should drive high single digit organic revenue growth, while its “Operational Excellence” quality programs and capacity utilization improvement should grow EBITDA well ahead of revenue.

All in all, there were 13 firms in the underwriting syndicate.

• Evercore ISI started it as Buy with a $33 price target.
• JPMorgan started it as Overweight with a $30 price target.
• KeyBanc Capital Markets started it as Overweight with a $33 target price.
• Morgan Stanley started it as Overweight with a $31 price target.
• Piper Jaffray started it as Overweight.
• Raymond James started it as Outperform with a $32.50 price target.
• Robert W. Baird started it as Outperform with a $32 price target.
• UBS started it as Buy with a $31 price target.
• William Blair started it as Outperform.

We have yet to see the rating issued by Leerink, but there was one rating that is formally “less than a Buy.” Credit Suisse started it as Neutral, but that still came with an upside price target of $30.

Patheon has a $4 billion market cap.

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