WB starts Albany Molecular at OP

William Blair initiated coverage of Albany Molecular Research (NASDAQ:AMRI) with an “outperform” rating. The stock closed at $17.31 on May 19.

Albany Molecular is a leading provider of discovery and formulation development services to the biopharmaceutical industry.

Analyst John Kreger writes that in the last five years, the company has acquired an increasing scale in active pharmaceutical ingredient manufacturing, finished dose manufacturing, and development services.

“We view Albany Molecular's presence in niche, underserved areas and its focus on co-developing generics as an excellent way for smaller-capitalization investors to participate in the pharma outsourcing trend,” he added.

Mr. Kreger forecasts Albany Molecular’s adjusted EPS at $1.07 in 2017, $1.23 in 2018, and $1.48 in 2019.

“We believe organic revenue growth for Albany Molecular can be sustained at a rate of mid-single digits or better,” he said. “When coupled with potential royalties related to the development of enhanced processes for generic products, we expect longer-term earnings growth of roughly 10% before the impact of additional M&A activity.”