Orexo: Challenging to achieve growth this year

Orexo had a strong end to 2016 and the report was consistently better than we expected. In the report, the company also made a positive forecast for this year to report positive EBITDA and cash flow, which was in line with our expectations. However, high license revenues in 2016 mean that it will be challenging to provide sales and profitability growth this year. After the report, we adjusted our view of the potential for Zubsolv downwards. The picture painted by the management is a continuation of the challenging competitive situation and price pressure. We are now expecting the market share to top 7.5 percent in 2019, compared with more than 9 percent previously. Despite lower expectations of Zubsolv, we believe there is a strong upside for the share from the current price levels and our fair value is set at SEK 60 (72) after the downward adjustment in expectations. However, for the first half of the year, there is a lack of major catalysts, which is why the share is expected to continue to be influenced by how the market share develops for Zubsolv.

Note: This is a translation of the original report, written in Swedish, released the 10 of February 2017

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