Despite bearish recommendations for various media sources, Recro Pharma (REPH) is still a stock to keep an eye on.
About Recro Pharma (REPH)
Recro Pharma (REPH) is a pharmaceutical company specializing in oral solid dose development and in addition has a manufacturing spaces that is capable of analytical development, quality control labs , packaging and more.
Recro Pharma (REPH)’s Positive Future
Recently REPH has spun off and split some departments of the company. While to spin-off is difficult to analyze, most analysts who study company spin-offs thinks there is upside potential in the future of Recro Pharma (REPH). The remaining contract development and manufacturing organization (CDMO) arm is rather quite defensive on pace to grow revenue to above 30% in 2019 and generates a 39% EBITDA. REPH currently trades at 8.3 EBITDA and 16.4x EPS which is a massive discount.
As a CDMO, they serve other companies in the pharmaceutical industry on a contract basis to provide drug manufacturing and drug development. Further more, CDMO business revenues are sticky and since they are written into drug applications, pharma companies must notify the FDA if they want to switch manufacturers.
Recro Pharma (REPH) Acquisition
Recro Pharma (REPH) is a rather unattractive investment as it trade on low valuations despite strong expected growth of revenue and earnings. With secular tailwinds in the CDMO industry and the potential for acquisition, analyst’s price the expected target to reach $22 assuming a 42% upside.
