Indivior PLC (LSE:INDV)'s solid fundamentals have been overshadowed by market concerns about a $290m legal provision, according to Jefferies.
Despite the company's recent litigation troubles, Jefferies remains positive about the pharmaceutical firm's outlook.
Following Indivior's full-year results, Jefferies has 'tweaked' sales and lowered underlying earnings (EBIT) by 8-11% due to higher selling and general administrative (S&GA) expenses, but remains optimistic about the company's long-term growth prospects.
Jefferies' revised 2,115p (down from 2,665p) price target assumes a cash settlement over four years and a 50 basis-point increase in the weighted cost of capital to reflect the current market focus on the litigation.
While investors are likely to remain focused on the legal provision, Jefferies notes that Indivior's Sublocade momentum is expected to continue in FY23, with sales guidance for the opioid addiction treatment of US$550m-6$00m in line with consensus estimates. The drug's use is expanding among physicians and facilities, and its increasing market acceptance is expected to support its growth.
The shares fell 5% on Monday to 1,600p and are down almost 18% in the last five trading days as the market has taken fright at the potential litigation costs implied by the provision in the full-year accounts. It is the subject of an action by 42 US states that believe it used dubious tactics to maintain market share of a key drug set to come off patent.
Of the four UK banks and brokerages logged as following Indivior, all of them are positive on the stock. The consensus price target is 2,495p.