On Thursday, Medexus Pharma (MDP:CN) (OTC: PDDPF) stock experienced a shift in market expectations as Canaccord Genuity (TSX:CF) adjusted its stance on the company. The firm downgraded the pharmaceutical company from Buy to Speculative Buy, simultaneously lowering the price target to C$2.65 from the previous C$3.00.
The adjustment by Canaccord Genuity reflects a change in valuation methodology for Medexus Pharma. The firm had previously valued the company at 5.0 times its forecasted adjusted EBITDA for the fiscal year 2025. This valuation was based on a discount compared to specialty pharma peers, consistent with Medexus's historical valuation gap.
Despite the downgrade, Canaccord Genuity noted the potential for upside from the approval of treosulfan, a drug in Medexus's pipeline. In light of this, the firm decided to increase the target multiple to 6.0 times the adjusted EBITDA estimate. However, due to a revised, lower EBITDA forecast, the price target was reduced.
The new valuation still represents a more speculative approach, as indicated by the firm's decision to lower the investment rating. The Speculative Buy rating suggests that while there could be potential for significant returns, there is also a higher level of risk associated with the investment.
Medexus Pharma, with this revised outlook, is now positioned with a more cautious investment profile according to Canaccord Genuity's analysis. Investors are watching closely for further developments, particularly regarding the regulatory status of treosulfan, which could influence the company's financial performance and stock valuation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.