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Concordia: Tickets Might Get Expensive After August 12th

CXRX trades at a discount due to high leverage.

CXRX will return to trading at normalized levels as debt is paid off.

Current share price offers justified risk/return considerations.

I have written an article on CXRX that shows, under a conservative scenario, the company could still achieve timely deleveraging and potential for 3.0x-5.0x return within 5 years as debt is paid off. As Q2 is coming up, we will be getting a second full quarter of results for AMCo, the crown jewel of CXRX. Institutional investors and others will get more comfortable with AMCo's performance. If Q2 performs, it could be a catalyst for short interest leaving the name and institutional money buying in. Management has exemplified transparency and commitment to communication. The company website has recently been redesigned, a small step but shows CXRX's global ambition and IR strategy.

It is important to establish a framework to evaluate CXRX and whether this battered name offers outsized risk/return.

I think about CXRX's situation as a two-part question:

1) How much is CXRX worth? Today and one year, two years, 5 years from now?

2) Is the current share price reflective of CXRX's risk/return profile? Is there money to be made here by being a patient contrarian here?

Before we answer the two questions above, let's make sure we understand something: when the share price is low enough, most companies, good or bad, could be an attractive investment. If CXRX is trading at $1, it would be a no-brainer for all of us to pile in. To invest in CXRX, we are not only discussing whether this name has risk, whether it should trade at a discount, whether the share price should...