RBC downgrades Concordia Intl to underperform

RBC Capital Markets downgraded Concordia International (NASDAQ:CXRX; TSX:CXR) to “underperform” from “sector perform” and cut its price target to $1 from $2.50. The stock closed at $2.38 on Dec. 6.

Britain’s Competition and Markets Authority (CMA) on Dec. 7 imposed a £90 million fine on Pfizer and Flynn Pharma, and ordered price reductions for phenytoin sodium capsules in the UK but noted that these price reductions will allow the drugs to remain profitable.

Analyst Doug Miehm writes that following this negative outcome, “we anticipate the focus of the CMA will now shift to other companies which have significantly increased drug prices, including Concordia.”

Citing the realistic nature of a fine from the CMA and mandated price reductions on certain drugs, Mr. Miehm said the $1.50 drop in his price target is “consistent with a potential $80-million fine against the company.”