Mallinckrodt PLC

Wall Street analysts expect upside potential of 35.45% for Mallinckrodt (MNK), based on the company’s closing price on March 22.

In fiscal 2018, Mallinckrodt’s (MNK) revenue fell 0.19% YoY (year-over-year) to $3.22 billion.

In its fourth-quarter investor presentation, Endo International (ENDP) guided for its fiscal 2019 adjusted operating expenses as a percentage of revenue being 24.5%–25.0%.

In its fourth-quarter investor presentation, Endo International (ENDP) guided for adjusted diluted EPS and adjusted EBITDA of $2.00–$2.25 and $1.24 billion–$1.34 billion, respectively, in fiscal 2019.

In its fourth-quarter investor presentation, Endo International (ENDP) guided for fiscal 2019 revenue of $2.76 billion–$2.96 billion, representing a low single-digit percentage YoY (year-over-year) decline.

Most analysts covering Endo International (ENDP) and Mallinckrodt (MNK) recommend “hold.” On March 5, Endo closed at $8.72, and Mallinckrodt closed at $22.39.

Bausch Health’s (BHC) wholly owned subsidiary Salix Pharmaceuticals generated revenues of $460.0 million in the third quarter compared to $452.0 million in the third quarter of 2017.

In the second quarter, Endo International (ENDP) reported revenues of $715 million, which is a YoY decline of 18.4%.

Baxter (BAX) announced the completion of its acquisition of Recothrom and Preveleak assets from Mallinckrodt for $185.0 million.

Mallinckrodt Pharmaceuticals, which produces specialty pharmaceutical products such as generic drugs and imaging agents, surged to a ten-day high on May 26.

The North America segment reported a growth of 22% to $1.6 billion during 4Q16 from $1.3 billion during 4Q15.

Revenues for Jakafi rose more than 42.0% to $852.8 million in 2016, from $601.0 million in 2015.

The S&P 500 Information Technology sector fell 0.87% on December 28. NVIDIA (NVDA) and First Solar (FSLR) were the top losers.

Specialty Generics’ contribution to Mallinckrodt’s net sales fell by 18% to $1 billion in 2016. The business had a 31% share in total net sales in 2016.

Specialty Brands had a 69% in Mallinckrodt’s total revenue in 2016, while Specialty Generics had a 31% share.

On an annual basis, MNK’s net sales soared by 16% to $3.4 billion in 2016. Despite its better-than-estimated performance, shares fell by 9% on November 29.

Of its three businesses, Bausch & Lomb’s share in Valeant Pharmaceuticals’ (VRX) overall EBITA (earnings before interest, tax, and amortization) was 32%.

Of its total outstanding shares, Valeant Pharmaceuticals’ (VRX) institutional ownership stood at 69.2%.

Mallinckrodt (MNK) has recently been making news due to its business model being questioned. A Citron Research report focused on the sustainability of Acthar’s higher level of exposure to government-oriented franchise.

The consensus 12-month target price for Valeant Pharmaceuticals is $36, which translates to a ~77.3% return potential compared to Valeant’s closing price of $20.3 on November 2, 2016.

To boost profitability and share prices, Valeant plans to focus on five strategic imperatives to help it pose stronger competition to ENDP, MNK, and GILD.

On December 15, 2015, Valeant Pharmaceuticals (VRX) announced its decision to enter into a fulfillment agreement with Walgreens.

On September 20, 2016, Regeneron Pharmaceuticals (REGN) entered a collaboration agreement with Teva Pharmaceuticals (TEVA).

Valeant Pharmaceuticals (VRX) has been keeping an eye on the progress of its dermatology and gastrointestinal portfolio.

StrataGraft, if approved, will be the first biological off-the-shelf skin substitute for treating severe burns.

Stratatech is a regenerative medicine company with a focus on the development of proprietary skin substitute products.

On August 11, 2016, Valeant Pharmaceuticals (VRX) was trading at a forward PE (price-to-earnings) multiple of ~3.0x.

Valeant Pharmaceuticals (VRX) announced earnings for 2Q16 on August 9, 2016.

Mallinckrodt (MNK) is a specialty pharmaceuticals company that relies on volume-driven growth. Let’s discuss the performances of its three segments.

During 4Q15 and 1Q16, Valeant Pharmaceuticals’ (VRX) net margin turned negative. That followed its struggling high-margin dermatology products and the foreign exchange impact.

Wall Street analysts anticipate that Valeant will record $2.47 billion and $2.54 billion total revenue for 2Q16 and 3Q16, respectively.

Wall Street analysts expect Mallinckrodt’s (MNK) net margin to jump to 24.3% in 3Q16 from 10% in 3Q15.

On June 29, 2016, Horizon Pharma was trading at a forward EV-to-EBITDA multiple of 4.67x, which is at a discount when compared with peers.

Based on the recommendations of eight brokerage firms, a Bloomberg survey reported that 100% of analysts gave Neurocrine Biosciences “buy” recommendations.

Soliris is Alexion’s leading drug. It was approved for paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome in 2007 and 2011.

Valeant Pharmaceuticals International (VRX) significantly raised the prices of two of its heart drugs—Nitropress and Isuprel—which caused a controversy and an outrage.

Valeant’s (VRX) controversies started with Philidor, a specialty pharmacy company that was accused of altering doctor’s prescriptions so it could sell more of Valeant’s costly drugs.

Much of Valeant’s growth was coming from price increases rather than volume gains, and that wasn’t sustainable. The company’s steep price increases came under regulator scrutiny.

Xtandi is Medivation’s (MDVN) only commercialized asset. During the first quarter of 2016, the drug recorded revenue of $547.2 million.

The total contribution from Mallinckrodt’s Specialty Generics segment in fiscal 2Q16 stood at $264.4 million, which represents a 27% YoY decline.

Acthar is Mallinckrodt’s (MNK) lead drug, which fetched $248.4 million, or 46%, of total sales for the company’s Specialty Brand segment.

Mallinckrodt’s Specialty Brands segment earned $535 million during fiscal 2Q16 and includes Acthar, the lead drug, as well as other drugs.

Wall Street analysts expected Mallinckrodt’s revenues for fiscal 2Q16 to be ~$871.5 million, but Mallinckrodt surprised them with sales of $918 million.

Jazz Pharmaceuticals’ Defitelio is the first and only approved treatment that increases survival in VOD patients with multi-organ dysfunction (or MOD).

Mallinckrodt (MNK) fell by 4.5% due to profit-booking. It closed at $58.40. The stock remained volatile on the backdrop of Valeant’s (VRX) episode.

Gattex is the first and only analog of glucagon-like peptide-2 (or GLP-2) indicated for short bowel syndrome. The drug is known as Gattex in the United States and Revestive in Europe.

In February 2015, Shire (SHPG) completed its acquisition of NPS Pharmaceuticals for $5.2 billion. Through the merger, Shire gained access to Gattex and Natpara.

Neurocrine Biosciences (NBIX) expects to submit a new drug application to the FDA for Valbenazine in 2016.

Over the past 18 months, Horizon Pharma has acquired three orphan drugs. The acquisition of Hyperion Therapeutics in May 2015 gave it Ravicti and Buphenyl.

On March 24, Horizon Pharma was trading at a forward PS multiple of 2.18x. It appears to be trading at a premium next to Valeant, Mallinckrodt, and Endo.

Acthar is Mallinckrodt’s (MNK) leading product, and the company plans to achieve mid-single-digit to low-double-digit growth for the drug in fiscal 2016.

In 1Q16, Acthar earned $286.7 million for Mallinckrodt, reflecting a YoY jump of 7.6%. It accounted for 31% of the company’s total revenues in that quarter.

The business strategies of both Mallinckrodt and Valeant reflect what the former refers to as “Acquire to Invest.”

On March 21, Mallinckrodt was trading at a forward PE multiple of 6.40x—an apparent discount compared to Johnson & Johnson and Teva.

Valeant Pharmaceuticals was trading at a forward EV-to-EBITDA multiple of 5.64x on March 16. This looks to be a huge discount when compared peers.

On March 16, Valeant Pharmaceuticals was trading at a forward PE multiple of 2.94x. This appears to be a significant discount compared to peers.

The mid-cap stocks of the Health Care Select Sector SPDR ETF (XLV) fell collectively by 2.6%. They underperformed XLV as of March 8, 2016.

Genzyme, a subsidiary of Sanofi (SNY), holds rare disease, multiple sclerosis, oncology, and immunology disease drugs in its portfolio.

Vimizim contributed 26% to the top line of BioMarin Pharmaceutical in 2015. Meanwhile, the number of patients on Vimizim rose by 10% during 4Q15 over 3Q15.

Quest Diagnostics (DGX) gained 2.9% on March 1, 2016, as it announced the completion of Outreach Laboratory

The stocks at the top of the SPDR S&P 500 ETF on December 30, 2015, were Allegheny Technologies (ATI), Mallinckrodt (MNK), and Tesoro Corporation (TSO).

On December 15, the stocks at the top of the SPDR S&P 500 ETF (SPY) were ENSCO (ESV), Noble (NE), and Mallinckrodt (MNK). ENSCO rose by 8.0%.

Eli Lilly (LLY) was the worst performer within the pharmaceutical subgroup as well as within XLV with a return of -3.0% on December 9, 2015.

The stocks at the top of the SPDR S&P 500 ETF (SPY) on November 27 were Avon Products (AVP), Kroger (KR), and Endo International (ENDP).

On November 23, Tyson Foods (TSN) closed at $48.09, which is well above its 100-day, 50-day, and 20-day moving averages of $44, $44, and $45, respectively

J.M. Smucker posted EPS of $1.62, beating the consensus estimate of $1.52. It also reported net sales of ~$2.1 billion, in line with the market expectation.

Anacor has a market cap of ~$4.63 billion, with a YTD return of 225.6% as on November 12. The company’s peers include Allergan and Mallinckrodt Public.

Stocks at the top of the SPY ETF on November 9 were Plum Creek Timber, Apache, and Norfolk Southern. They gained 17.3%, 13.2%, and 11.0%, respectively.

The technology sector fell by 0.26% on October 20. Giant tech companies’ stocks fell including Micron Technology, Western Digital, Google, and IBM.

Liquidity, or “financial market liquidity,” refers to the ease with which you can buy or sell a security in financial markets at minimal cost.

Stanley Fischer expressed his views on the US economy at the G30 Annual International Banking Seminar on October 11. This came three days after the dovish minutes of the FOMC September meeting.

The SPDR S&P 500 ETF (SPY) fell by 2.51% on Monday, September 28, 2015, while the Direxion Daily S&P 500 Bull 2X ETF (SPUU) fell by 4.95%.

Investor flows in high yield bond funds turned positive last week after two successive weeks of outflows.

Junk bond issuers came back to the primary market in the week ended September 11, 2015, after two weeks of no issuance.

PerkinElmer (PKI) with a return of 5.94% was the best performer of XLV’s bottom ten stocks.

On April 21, 2015, Teva (TEVA) launched a proposal to acquire Mylan for $82 a share in a 50% cash, 50% stock deal worth $43 billion. Mylan rejected the offer.

Teva’s increased profitability for its generic medicines was partially offset by decreased profitability of its specialty medicines, which were down by 13% in 1Q15 from 1Q14.

According to the US trade balance report, the US trade deficit widened to $51.37 billion in March against an expected $41.7 billion. March is the largest monthly widening since 1996.

Teva plans to reduce the cost per tablet unit from $15 to $10. It’s shifting manufacturing operations to low-cost areas to improve product profitability.

The largest issuers of high-yield bonds in the primary market last week were Fiat Chrysler Automobiles, GM Financial, and Mallinckrodt International.

Investors showed interest in high-yield bonds in the week ended April 10. Fiat Chrysler issued B2/BB- rated junk bonds worth $3 billion.

In the week to April 10, junk bonds, or high-yield debt issuers, returned to the primary market. It was the same week the FOMC released its March 2015 meeting minutes.

In the fourth quarter, Magnetar increased its exposure to Actavis. It bought 42,107 shares in the pharmaceutical firm. It represents 1.5% of the fund’s 4Q14 portfolio.

Teva operates in a dynamic environment with a number of risks that could have a material adverse effect on the company.

Teva intends to target a minimum annual profit of $4.3 billion, or $5 EPS, through 2016. To achieve this, Teva is reorienting its business model.

Revenues for Teva’s (TEVA) Specialty Medicines segment grew by 2.1% to $8,560 million in 2014, from $8,388 million in 2013.

In January 2015, Actavis launched a generic specialty injectable portfolio, containing ~20 products across its therapeutic segments in the US.

Actavis intends to invest ~$1.7 billion in R&D annually. It expects to add ~15 projects in near- and mid-term development to the company’s product pipeline.

ETFs are the investment funds—like index funds and mutual funds—that track an index, a commodity, or a basket of assets. ETFs are publicly traded on an exchange.

Adage Capital raised its position in NiSource Inc. (NI) in the third quarter. The position accounted for 0.52% of the fund’s total 3Q14 portfolio.

Adage Capital raised its position in Citigroup Inc. (C) in the third quarter. The position accounted for 0.98% of the fund’s total 3Q portfolio.

Adage Capital exited a position in Kinder Morgan Inc (KMI) in the third quarter. The position accounted for 0.37% of the fund’s total 2Q portfolio.

Adage Capital added a new position in Duke Energy in the third quarter. The position accounted for 0.20% of the fund’s total 3Q portfolio.

Adage Capital added a new position in TRW Automotive Holdings, which accounted for 0.32% of the fund’s total 3Q14 portfolio.

Adage Capital added a new position in Mallinckrodt Plc (MNK) in the third quarter of 2014. The position accounted for 0.82% of the fund’s total portfolio.

Adage Capital’s US long portfolio grew from $38.69 billion in 2Q14 to $40.2 billion in 3Q14. The portfolio comprised around 699 stocks.

On October 9, 2014, Time Warner announced that its shareholders approved the Comcast merger, with over 99% of votes cast in favor of the deal.

Magnetar reduced its position in AAL in the third quarter. The position accounts for 1.17% of the fund’s total portfolio in the third quarter.

Magnetar reduced its position in MNK in the third quarter. The position accounts for 1.80% of the fund’s total portfolio in the third quarter.

Magnetar increased its position in TK in the third quarter. The position accounts for 7.67% of the fund’s total portfolio in the third quarter.