Morningstar | Timing and Verdict of Akorn’s Fate With Fresenius Still Unknown. See Updated Analyst Note from 27 Aug 2018
Akorn’s future still appears uncertain as last week’s comments from the judge handling the case with Fresenius don’t necessarily point to a near-term or clear-cut verdict for the two companies. While Fresenius’ claims of manufacturing and data integrity issues have the potential to alter the terms of the agreement, Fresenius may not be able to completely sever its acquisition agreement. We’re lowering our fair value estimate to $16 as we’ve reduced our stand-alone profitability expectations for the company based on recent results, but we still incorporate a 25% probability the acquisition by Fresenius will proceed. Regardless, Akorn’s recent performance still reflects tough competitive pressure in the U.S. generics market, which is the main contributor to our no-moat rating for the firm.Even when stripping out non-recurring items, Akorn’s performance remains weak despite an improvement in revenue from the first quarter of this year. Akorn recognized approximately $61 million in in-process R&D impairments in its most recent quarter as product launch opportunities have dwindled. Additionally, Akorn recognized nearly $36 million in legal expenses and data integrity assessment costs related to the Fresenius litigation.
Akorn is a generic pharmaceutical company that develops, manufactures and markets generic and branded prescription pharmaceuticals, branded as well as private-label over-the-counter consumer health products and animal health pharmaceuticals. The company's segments include: Prescription Pharmaceuticals, which primarily consists of generic and branded prescription pharmaceuticals in a variety of dosage forms including sterile ophthalmics, injectables and inhalants and non-sterile oral liquids, topicals, nasal sprays and otics; and Consumer Health, which primarily consists of branded and private-label over-the-counter products and animal health products dispensed by veterinary personnel.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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