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United Therapeutics started at sell by Credit Suisse

March 18, 2017

Credit Suisse initiates coverage on United Therapeutics Corp. (NASDAQ: UTHR) with a Underperform rating and a price target of $120.00.

Analyst Alethia Young commented, “The recent acquisition of UTHR’s competitor has driven a large M&A premium in UTHR shares, and we see downside due to potential near-term and generic risk starting late 2017-2018. United Therapeutics’ product franchise consists of pulmonary arterial hypertension (PAH) therapies. PAH is essentially high blood pressure in the lungs. We think an acquisition for United Therapeutics is unlikely in the near term since the company has mentioned doing deals to acquire. We see catalysts in the coming month that could lead to downside in shares, especially with shares trading above (~20%), the level at which we see the fundamental value of the company. In the long term, we remain more cautious on what the current valuation would suggest around risk to UTHR’s PAH franchise from generics launching as early as 2018. We think that the stock trades at a higher non-GAAP P/E multiple than what consensus actually shows; we estimate 2018 and 2019 P/E multiples of 15x and 20x vs. consensus of 10x and 11x, respectively.”

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