This company has been on a mergers and acquisitions binge over the past three years, and its stock was hit hard in 2017. Mallinckrodt PLC (NYSE: MNK) is a global specialty biopharmaceutical and medical imaging business that develops, manufactures, markets and distributes specialty pharmaceutical products and medical imaging agents.
The company’s areas of focus include therapeutic drugs for autoimmune and rare disease specialty areas, like neurology, rheumatology, nephrology and pulmonology, as well as neonatal critical care respiratory therapies and analgesics and central nervous system drugs.
Stifel is bullish on Mallinckrodt’s outstanding pipeline and noted this:
The company’s late-stage pipeline is rapidly approaching several meaningful clinical and regulatory catalysts this year, which if successful, will meaningfully change the profile of the company. Specifically, we look forward to the stannsoporfin/infant jaundice AdComm in May followed by expectation of a positive PDUFA in August.
Notwithstanding, the company will also see important data events for terlipressin/hepatorenal syndrome (interim analysis), VTS-270/Niemann-Pick (pivotal Phase 2), and Acthar (Phase 4, RA and MS), which should shape the conversation in the second half of 2018 and beyond. Capital allocation remains rational; debt pay down remains a priority, following the $1.2 billion acquisition of Sucampo, to rapidly return to its 3.5-4.0 times historical leverage ratio (currently >4.0x).
Stifel has a massive $50 price target, while the consensus target is $27.58. The stock closed at $15.02 on Tuesday.
Northern Oil & Gas
Stifel is very positive on this small-cap energy play. Northern Oil & Gas Inc. (NYSE: NOG) is engaged in the acquisition, exploration, development and production of oil and natural gas properties, primarily in the Bakken and Three Forks formations within the Williston Basin in North Dakota and Montana.
The company holds working interests in over 2,630 gross (204.3 net) producing wells, including over 2,630 wells targeting the Bakken and Three Forks formations and other wells targeting other formations. It leases approximately 165,910 net acres, all located in the Williston Basin. The company engages in oil exploration and production through nonoperated working interests in wells drilled and completed in spacing units that include its acreage.
The analysts noted this when they initiated coverage on the company:
Our investment thesis is predicated on differentiated asset performance in a preferred basin with limited competing investment alternatives. As a result of improving trends in asset productivity and differentials, the Williston Basin is quickly becoming the preferred quality basin for investors to hedge their Permian Basin exposure. As a result of Northern Oil’s strategic business model, the company has the opportunity to participate in the best wells in the basin and acquire highly accretive assets in an environment with limited buyer competition. Equally important, NOG is the only Bakken pure-play in the sector at present.
The $3.10 Stifel price target compares with the consensus figure of $2.83. Shares closed most recently at $1.56.
Three totally different plays that all have huge upside potential for investors able to commit some of their more speculative capital to these trades. It may make sense to scale in some money as earnings reports are right around the corner.