Sirtex Medical Limited

SRX Details
 
Expects higher sales in the second half & strong earnings for the year:Sirtex Medical Limited (ASX: SRX) stock rallied 14.18% on January 17, 2018 after the company released a positive trading update. SRX for the first half of the year which ended 31 December 2017, expects 16% growth in the earnings before interest, tax, depreciation, and amortisation (EBITDA) to approximately $34 million over prior corresponding period. However, the worldwide dose sales of the company’s SIR Y-90 microspheres were flat in the first half. The company expects higher sales in the second half. Therefore, for the full year, SRX expects EBITDA to be between $75 million and $85 million, compared to an underlying EBITDA of $61.5 million reported in the FY 17. Moreover, the cashflow generation is also expected to be strong. With such positive updates, the group has been aiming to secure the lost confidence and has risen 8.08% in three months as on January 16, 2018. Looking at the developments, we give a “Hold” recommendation on the stock at the current price of $17.83
 

SRX Daily Chart (Source: Thomson Reuters)
 

Mayne Pharma Group Limited

MYX Details
 
Challenging market conditions in the US affecting the whole generic industry:Mayne Pharma Group Limited (ASX: MYX) in the US had faced challenging market conditions due to the customer consolidation, the speed up of approvals through the US FDA that had accelerated generic price deflation and the loss of exclusivity on Doryx 50mg and 200mg tablets. These changing market dynamics have impacted the whole generic industry leading to most of the company’s US peers reporting heightened levels of price deflation and declining share prices, revenue, earnings and margins over the last year. Therefore, the group revenue at the end of October fell 12% to $151m versus the prior corresponding period. The year to date results have also been affected due to a number of abnormal one-off items that include extraordinary stock obsolescence charges and cost issues following the investment in inventory to support the Teva portfolio acquisition. On the other hand, MYX stock has risen 8.33% in three months as on January 16, 2018 with stock price movements noted for Teva Pharmaceuticals. However, given the volatility and market headwinds, we believe that the stock is “Expensive” at the current price of $0.78, until some breakthrough products or developments are unveiled.
 

MYX Daily Chart (Source: Thomson Reuters)
 

Blackmores Limited

BKL Details
 
Australian retail remains challenging:Blackmores Limited (ASX: BKL) returned to profit in the first quarter of FY18 after a subdued FY17. BKL in the first quarter of FY18, had reported 28% growth in the direct China sales, and launched a new range of kids’ products that are more than 99% sugar-free. The group also maintained tight cost control while continuing to invest in key growth platforms, and launched a new world-class education platform.
 

1Q FY 18 Financial Performance (Source: Company Reports)
 
However, Australian retail remains challenging and this was compounded by strong sales at the end of the fourth quarter, that had impacted the July result in Australia. The consumer sentiment in Australia is subdued though sales in Australia continue to be boosted by strong consumer demand from Chinese consumers. The group also got a boost recently with peers like Bellamy’s moving up at the back of strong demand from China. Meanwhile, BKL stock has risen 14.02% in three months as on January 16, 2018 and is trading at a lofty price to earnings level. Therefore, we give an “Expensive” recommendation on the stock at the current price of $155.96


BKL Daily Chart (Source: Thomson Reuters)

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