UPDATE: BTIG Initiates Coverage On Alexion Pharmaceuticals

BTIG initiated coverage on Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) Monday with a Buy rating and $250 price target.

Analyst Hartaj Singh believed the “current valuation reflects a quality company but does not account for what we believe will be rapid top & bottom line estimate increases over the next 2-5 years. We are 8-16 percent above consensus sales and 12-20 percent above consensus EPS in 2015-18.”

Singh claimed that “consensus for 2015-19 is underestimating the rate of patient additions for aHUS and the continuing strength of PNH in the US/EU.”

“We are $260m above 2018 consensus sales of $403m for asfotase alfa as we believe that consensus is underestimating the size of the prevalent pool in hypophosphatasia post-treatment. Currently the mortality rate is 50 percent within 12 months post-diagnosis,” according to Singh.

“Alexion’s keen focus on costs will manifest itself in above-consensus operating leverage. The adjusted EBITDA margin jumped by 290bps in 2013 and we expect a 490bps increase in 2014. By 2019, we expect it to approach the high 50’s.”

The price target was based “on a blended DCF and 2016 P/E multiple approach” and assigned “a 30X terminal multiple to the DCF and 2016 EPS.”

Alexion Pharmaceuticals closed Monday at $182.17, down 2.37 percent.