MannKind Corporation: Jefferies Votes Confidence In Afrezza And Vincata Raises MannKind's PO To $54

The Story. It has been more than two weeks since MannKind Corporation (NASDAQ: MNKD) announced their partnership with the French Pharmaceutical Powerhouse, Sanofi (NYSE: SNY), to manufacture Afrezza. The stock took an initial dive and traded as low as $6.72 due to the market misconception regarding the deal with Sanofi. Nonetheless, MannKind has since appreciated slowly but steadily to close the August 27, 2014, trading session at $7.47 or up by 11 percent from what was arguably a bear raid.

 

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Source: Google Finance

More Insights. Ringing true to Warren Buffett's teaching that time is on your side when you invest in a good stock, MannKind is starting to change Wall Street's views. A sharp Jefferies analyst, Shaunak Deepak, initiated his buy rating on MannKind with the price target of $10 per share. According to the Jefferies analyst,

"We believe Afrezza could address a major unmet need among patients poorly controlled with oral drugs that have not advanced to injectable agents. Surveys of insulin non-adherence suggest not insubstantial portion of patients reject insulin due to reluctance to take shots. Accounting for other factors that influence patient avoidance of insulin, we believe Afrezza could be used as a first-line insulin for almost 8% of type 2 patients failing oral drugs, worth $1.6 billion in peak U.S. sales. We believe Sanofi would promote Afrezza as a first-line insulin to gain and retain patients for its + $8 billion insulin franchise."

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We are long on ITMN and MNKD and we do not have any financial relationship with any company we cover.

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Michele Grant 4 years ago Member's comment
This was a great analysis. Not everyone will agree with the author's opinion but I'm convinced. Just annoying to have to click through to the other site to finish the article.
Retail Investor 360 4 years ago Author's comment
Michele Grant. Thank you for your wise comment. We appraised InterMune at the minimum PO of $68 when the market price of the stock was at roughy $10 per share. Interestingly, there are some analysts who still believe InterMune is worth only $35 even after it was bought out by Roche for $74; and we employed the same valuation for both InterMune and MannKind.
Joel Santiago 4 years ago Member's comment
Can you please explain the $54?
Retail Investor 360 4 years ago Author's comment
The appraisal was done quite similar to InterMune (ITMN) based on a new school of thoughts called "comparative market analysis," which is commonly used by realtors to appraise houses. For instance, the value of a house in a particular neighborhood should be priced similar to adjacent houses given than they have with similar sizes, room, acreage,and etc. I believe that CMA is more accurate for developmental biotech b/c the company has not generate revenues.
Joel Santiago 4 years ago Member's comment

Thank you and a thumbs up for your reply!