Will This Price Target Increase Help Akorn (AKRX) Stock Today?

Story updated at 9:50 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Leerink Swann raised its price target for Akorn (AKRX) to $40 Thursday, reiterating its "market perform" rating.

Shares of Akorn gained 0.6% to $39.22 in morning trading.

The analyst firm also raised its EPS estimates for the company through 2015. Akorn has solid pricing, according to Leerink analysts, who expect continued industry consolidation.

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Separately, TheStreet Ratings team rates AKORN INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate AKORN INC (AKRX) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AKRX's very impressive revenue growth greatly exceeded the industry average of 4.7%. Since the same quarter one year prior, revenues leaped by 95.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, AKRX's share price has jumped by 112.02%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • AKORN INC's earnings per share declined by 27.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AKORN INC increased its bottom line by earning $0.46 versus $0.32 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus $0.46).
  • The gross profit margin for AKORN INC is rather high; currently it is at 53.24%. Regardless of AKRX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AKRX's net profit margin of 5.64% is significantly lower than the industry average.
  • The debt-to-equity ratio is very high at 2.41 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, AKRX has managed to keep a strong quick ratio of 2.39, which demonstrates the ability to cover short-term cash needs.
  • You can view the full analysis from the report here: AKRX Ratings Report

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