Zacks Investment Research downgraded shares of Rockwell Med (RMTI) from NEUTRAL to UNDERPERFORM on September 14, 2012, with a target price of $4.00.
We feel there is significant risk that Rockwell's revenue will remain relatively flat to only slightly positive through 2015. We currently model Calcitriol to launch next year but believe management’s sales expectations for their vitamin D analogue product may prove to be wildly optimistic. Our ~$4 million in modeled SFP revenue in 2015 is already risk-adjusted for what we believe to be material aggregate risk encompassing potential for delays in the clinical trials/data analysis/regulatory filing/FDA turnaround, failure to hit efficacy endpoints, failure to gain FDA approval, less than compelling ESA sparing, and (assuming approved and launched) a strong competitive headwind. If the substantial R&D spend does not produce positive ROI in relatively short-order, shareholder value could be significantly impaired. Our DCF-generated valuation implies fair-value of about $4.00/share. We are initiating coverage of RMTI with an Underperform (Sell) rating.
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