The local share market may be sinking lower on Tuesday, but the same cannot be said for the Mayne Pharma Group Ltd (ASX: MYX) share price this afternoon.
At the time of writing the pharmaceutical company's shares are on course to finish the day higher and are up 4% to 84.7 cents.
Why is the Mayne Pharma share price charging higher today?
With no news out of the company, the catalyst for today's gain appears to be a broker note out of Citi this morning.
According to the note, the broker has initiated coverage on Mayne Pharma with a buy rating and 95 cents price target. This price target implies potential upside of over 12% during the next 12 months from the current share price.
Although the broker acknowledges that the U.S. generic drugs market is hard to predict due to the challenges it faces, the broker remains positive on Mayne Pharma for a couple of key reasons.
One is that it believes the company's sales force expansion could put it in a position to profit by growing its market share.
The other is the opportunities that Mayne Pharma has to grow through the consolidation of smaller industry peers.
Should you invest?
I think that Citi makes a great point on Mayne Pharma and that it could be a good option for investors looking for exposure to the pharmaceutical industry.
While I do have concerns over the difficult trading conditions it faces in the U.S. generic drugs market due to price deflation, I feel the 40% decline in its share price over the last three and half months has de-risked things significantly.
This could make it worth considering along with the shares of pharma industry peers CSL Limited (ASX: CSL) and Telix Pharmaceuticals Ltd (ASX: TLX).
