Sirtex: upgraded from ‘Reduce’ to ‘Hold’

Sirtex is still trading 33% below its level prior to last week’s trading update. Issues such as competition, reimbursement, complex work-up, short sales cycle, and the first admission that SIRFLOX survival data is needed to drive front-line use were cited as causes for the weakness. While these issues are nothing new, it remains curious as to why all concerns culminated this half, especially as all competitive agents were launched more than a year ago. Although we can’t definitively answer the “why now” question, we do not believe the base business has suddenly fallen off a cliff (5-year average dose sales c19%), but it is slowing (3-year average 17.6%; FY16 16.4%). The risk/return is better balanced now and we have upgraded our rating from ‘Reduce’ to ‘Hold’, with a lower price target of $15.60. Click the pdf below for our updated research, or the video below to hear from Senior Analyst, Derek Jellinek: