Why Wall Street Has Mixed Opinions on Mallinckrodt

Analysts’ recommendations and target prices

Wall Street analysts expect upside potential of 35.45% for Mallinckrodt (MNK), based on the company’s closing price on March 22. In 2019, analysts have revised the company’s target price upward twice, from $29.00 in January to $29.07 in February and to $29.92 in March. The current consensus analyst recommendation for the stock is “hold.”

To learn about the key growth drivers for Mallinckrodt in fiscal 2019, check out What Could Drive Mallinckrodt’s Growth in Fiscal 2019.

Why Wall Street Has Mixed Opinions on MallinckrodtOf the 15 analysts covering Mallinckrodt, two recommend a “strong buy,” four recommend a “buy,” seven recommend a “hold,” and two recommend a “sell.” The highest target price estimate for the company is $42, and the lowest is $14.

On March 22, Mallinckrodt closed at $22.09, 7.18% lower than its previous closing price, 89.61% higher than its 52-week low of $11.65, and 39.73% lower than its 52-week high of $36.65. The company’s market capitalization stands at $1.99 billion.

Based on its closing price on March 22, Endo International has reported returns of 1.01% in the last week, 7.65% in the last month, and 24.59% in the last quarter. The company has reported returns of -25.57% in the last half-year, 51.61% in the last year, and 39.81% year-to-date.

Share price variations

In the fourth quarter, Mallinckrodt reported revenues of $834.9 million and non-GAAP EPS (earnings per share) of $2.18, higher than consensus estimates by $153.45 million and $0.20, respectively. Subsequently, the company’s share price jumped from $21.56 on February 25 to $24.48 on February 28, continuing its upward trajectory all the way to $24.91 on March 1.

However, after news of Purdue Pharma considering bankruptcy, all companies with opioid painkiller franchises—including Mallinckrodt—have come under pressure. Mallinckrodt slipped to $23.25 on March 4 and went as low as $20.92 on March 7.