the start of something big - $1.80 target

From the Fosters morning report on their website, link below, $1.80 target - love them apples:


Unilife Corporation Ltd (UNS.AS X) – The start of something big

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Signing of multiple supply agreements.
Investment Highlights:
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Management starting to deliver on their promise
– 3 deals announced. Over recent months management have started to deliver on their promise on converting an expansive commercial pipeline into formal supply agreements with three deals announced with major pharmaceutical companies. Importantly, t he deals completed provide diversity in both customer (Sanofi, AstraZeneca and Hikma) a nd product mix (Unifill finesse, Unifill Nexus and wearable pump) and now positions UNS as an emerging player in the medical device delivery segment. Management have guided more deals to be concluded prior to year end.
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Funding risk alleviated with US$71m in cash payments: We estimate the up-front payments from the 3 deals announced (excluding any production revenue) should provide US$71m over the next 24 months (Hikma US$40m, Sanofi US$15m, Medimmune $16m FSBe) and will go a long way to covering the forward 24 month working capital, after which we expect production to materially ramp up. FY13 operating outflow peaked at US$41m.
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Deals provide validation of UNS products and business model. We view the 3 deals announced remove the near term funding risk, provides investors with validation of the product set and business model, visibility of near term production volumes and sweeps away the layers of doubt which have surrounded the company. The first deal with Sanofi for its antithrombotic drug Lovenox is for the Unifill syringe, the second with AstraZeneca is for wearable pumps and finally t he deal which captured the market’s attention is a major supply agreement with UK-based Hikma for Nexus (pre-filled) with a significant upfront US$40m in milestone cash payments.
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Strategically positioned to be a major player in the lucrative wearable pumps market. We believe the market has underestimated the importance of the MedImmune deal for wearable pumps and believe this the first of many deals in this platform. The wearable pump market is estimated to be worth US$8.8b by 2024, driven by a surge in biologic drugs. Drug and device combination are approved by the FDA, once a drug is commercial there is low risk of device sub stitution providing long term earnings potential spanning the lifecycle of the drug.
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Earnings potential of wearable pumps is immense. We estimate a deal to deliver 1 single biologic to market could add up to US$875m to UNS valuation (assuming $50m GM, NPAT contribution $35m & earnings multiple of 25x). Each major p harmaceutical company will have multiple biologics in their R&D pipeline. Further deals will support our assertion that UNS is shaping up to be a leader in this space.
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Earnings update. We have modified our estimates for fiscal 2014 and 2015 to reflect the new development agreements with upfront fees and ramp up assumptions. The net impact of our changes results in FY14 and FY15 EPS increasing to -$0.20 and $0.03 respectively (previously -$0.64 and -$0.36).
Recommendation:
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We reiterate our BUY recommendation and increase our price target to $1.80/sh from of $1.50/sh. UNS is one stock to own in your portfolio over the coming months as it demonstrates our valuation potential and deliver 3x upside from current market valuation.

http://www.fostock.com.au/researchreports