SRX 0.00% $33.55 sirtex medical limited

Important Catalyst Looms For Sirtex Medical

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    Some balance perhaps.
    FNArena News - February 09 2015

    -"Standard of care" potential
    -Growth potential outside of study
    -Bear case minimal impact

    By Eva Brocklehurst

    Sirtex Medical (SRX) has reached a key point, given the potential catalysts over the next few months. Results from its SIRFLOX study are to be announced in late March and Moelis is very optimistic.

    There are three recommendations on the FNArena database. UBS and Macquarie are generally cautious ahead of the SIRFLOX study results while Morgans, with a Reduce rating, believes trading levels reflect excessive optimism and, even if the study is positively conclusive, it will be hard to change clinical practice - at least in the short term. The database consensus price target is $23.34, which suggests 21.8% downside to the last share price. Targets range from $14.03 (Morgans) to $28.00 (UBS and Macquarie).

    Moelis differs from these brokers substantially, reiterating a Buy rating and raising its target to $36.70, maintaining a view that the results from the SIRFLOX study will be favourable. In fact, the broker is of the belief that given the current market cap weighting to the Small Industrials index and the large growth potential, if the stock is not represented in a portfolio then this is a "bet against it".

    In the broker's view, the stock is de-risked compared with other biotech developers because of the nature of its study. In addition, strong growth in doses and faster-than-anticipated recruitment in other trials bodes well. The company has achieved over 40 consecutive quarters of growth in its current form, with only a 2.0% market penetration on Moelis' estimates. Pending favourable results from the SIRFLOX study, SIR-Spheres could be elevated to a first-line treatment. It may even become "standard-of-care", in Moelis' view, which would expand the market size and driving greater market share. Hence, the broker considers this stock compelling as both a near term and longer term investment. ..... etc etc
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