Alkermes Plc – Value Analysis (NASDAQ:ALKS) : October 6, 2017

Capitalcube gives Alkermes Plc a score of 31.

Our analysis is based on comparing Alkermes Plc with the following peers – Acorda Therapeutics, Inc., Johnson & Johnson, Bristol-Myers Squibb Company, Novartis AG Sponsored ADR, Teva Pharmaceutical Industries Limited Sponsored ADR, Sanofi Sponsored ADR, Zogenix, Inc., Pfizer Inc. and Astrazeneca PLC Sponsored ADR (ACOR-US, JNJ-US, BMY-US, NVS-US, TEVA-US, SNY-US, ZGNX-US, PFE-US and AZN-US).

Investment Outlook

Alkermes Plc has a fundamental score of 31 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Taking peer performance into consideration, relative performance over the last month and last year is around the peer median.
  • It currently trades at a Price/Book ratio of (6.68).
  • ALKS-US‘s earnings and EBITDA are both negative which suggest that P/E or Price/EBITDA are not meaningful to make this analysis between operating advantage (ROE) and growth expectations (as suggested by P/E or P/EBITDA).
  • ALKS-US has relatively low net profit margins while its asset efficiency is relatively high.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • ALKS-US‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • ALKS-US‘s earnings and EBITDA are both negative which suggest that P/E or Price/EBITDA are not meaningful for an analysis between historical growth (using annualized three-year revenue growth) and investor growth expectations (as suggested by P/E or Price/EBITDA) .
  • The company seems to be over-investing in a business with median returns.
  • ALKS-US‘s operating performance may not allow it to raise additional debt.

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Leverage & Liquidity

ALKS-US would seem to have a hard time raising additional debt.

  • With debt at a relatively low 3.24% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 15.23%), and relatively tight interest coverage level of -14.33x, ALKS-US would have a hard time raising much additional debt. Thus, the company is classified as having Limited Flexibility when it comes to raising more debt.
  • All 9 peers for the company have an outstanding debt balance.

ALKS-US has maintained its Constrained profile from the recent year-end.

  • ALKS-US‘s interest coverage is less than (but within one standard deviation of) its five-year average interest coverage of -7.28x.
  • Though its interest coverage has remained relatively stable at -14.33x compared to 2016, its peer median has decreased to 7.71x from 9.09x during this period.
  • Interest coverage rose 1.07 points relative to peers. It is also below the 2.50x coverage benchmark unlike the peer median.
  • ALKS-US‘s debt-EV is less than (but within one standard deviation of) its five-year average debt-EV of 6.77%.
  • Compared to 2016, debt-EV has remained relatively stable for both the company (3.24%) and the peer median (15.23%).

Access the detailed analysis for Alkermes Plc

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Acorda Therapeutics, Inc. 29.71 2.39 0.51 14.74
Johnson & Johnson 9.17 1.34 27.52 61.86
Bristol-Myers Squibb Company 8.82 1.59 27.66 67.55
Novartis AG Sponsored ADR 12.68 1.01 11.85 37.01
Teva Pharmaceutical Industries Limited Sponsored ADR 46.96 0.94 4.37 10.97
Sanofi Sponsored ADR 17.78 1.59 19.14 43.53
Zogenix, Inc. 7.13 3.59 -31.8 -292.75
Pfizer Inc. 19.04 1.34 11.05 36.4
Astrazeneca PLC Sponsored ADR 19.42 0.91 2.85 17.5
Alkermes Plc 3.24 3.54 -14.33 -6.22
Peer Median 15.23 1.47 7.71 26.95
Best In Class 3.24 3.59 27.66 67.55

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Company Profile

Alkermes Plc operates as a biopharmaceutical company. It engages in the development, manufacturing and distribution of medicines. The company was founded on May 4, 2011 and is headquartered in Dublin, Ireland.

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