Roth downgrades ANI Pharma to neutral

Roth Capital Partners downgraded ANI Pharmaceuticals (NASDAQ:ANIP) to “neutral” from “buy,” pending the company’s 2017 financial guidance. Roth maintained its $69 price target for the stock, which was quoted at $59.53, down $3.52, in the afternoon session on Feb. 22.

“We have near-term concerns with the recent market share decline for the EEMT (esterified estrogens/methyltestosterone) franchise,” writes analyst Scott Henry. “However, the long-term prospects remain more focused on the emergence of corticotropin as a material revenue generator,” he added.

Mr. Henry said EEMT has near-term headwinds. “Make no mistake, ANI is a much more diversified company than a couple years ago,” with EEMT contributing only about 16% of his 2017 forecasted revenue. That said, it is a high margin product that likely contributes close to 33% of EBITDA. “In a couple years, it will be a minor lever, but for now it still matters.”

Mr. Henry said the issue with EEMT is market share losses as the product has lost about 10% share over the past six months, sliding to 48% share from 60% in July 2016. On top of these market share losses, he said the category is declining almost 20% year-over-year.

A potential offset to EEMT is erythromycin ethylsuccinate. “This antibiotic has the ability to offset much of the lost share, with peak potential possibly $20-million or higher,” he said. 

“We recognize that corticotropin is probably the larger long-term lever when it comes to ANI, and that this could make EEMT a non-factor as soon as 2018,” Mr. Henry added.