Indivior surges again as Jefferies, Citi upgrade after $600m settlement

Indivior surged on Monday as Jefferies and Citi upgraded their ratings on the stock after the company reached a settlement with US authorities related to its opioid addiction treatment Suboxone.

Indivior announced at the end of last week that it had agreed to pay federal and state authorities $600m over seven years and have its wholly-owned subsidiary, Solutions Inc, plead guilty to a felony charge to resolve allegations that it engaged in an illegal scheme to boost prescriptions of Suboxone.

Shares jumped 38% on news of the settlement on Friday and by 1130 BST on Monday they were in the black again, trading up 33.1% at 159.20p.

Jefferies upgraded its stance on Indivior shares to ‘buy’ from ‘hold’ and lifted its price target to 200p from 70p on the news. It said the initial market reaction to the settlement was not "reflective of the removal of this significant overhang".

It said the DoJ investigation and subsequent indictment have been a significant overhang for Indivior since its spin-out from Reckitt Benckiser in 2014.

"In our view, the $600m settlement is significantly better than expectations and covers off the additional related FTC and State subpoenas investigations. Furthermore, we see the payment horizon of seven years as comfortably within Indivior’s means, even in our downside scenario."

Jefferies said it expects the focus to return to fundamentals and sees an attractive risk-reward, driven by long-term potential for Sublocade, which is also used to treat opioid addiction. It added that around $350m of available liquidity will likely put increased focus on capital allocation.

The shares were also upgraded by Citi, to ‘buy’ from 'neutral', as it said they were only factoring in minimal success for Sublocade and schizophrenia treatment Perseris. Citi lifted its price target to 165p from 85p