Alexion slips as analyst sets 'Neutral' rating

Alexion Pharma declines after analyst says Soliris should do well, but share price is high

Associated Press

NEW YORK (AP) -- Shares of Alexion Pharmaceuticals Inc. declined Friday after a Citi Investment Research analyst said Wall Street expectations for the company are very high, and Alexion will have to surpass investor estimates to keep its stock price rising.

THE SPARK: Analyst Yaron Werber began covering the stock with a "Neutral" rating and a price target of $104 per share. Werber said the price of Alexion shares is high compared to its earnings because its recent quarterly results have exceeded expectations. Shares trade at a price-earnings ratio of 81, meaning it would take that many years for investors to get back what they paid for it. Werber said the Cheshire, Conn., company will need to continue that pattern to sustain the growth in its stock price.

The analyst said he expects Alexion to meet Wall Street estimates over the next two years but doesn't think the company will surpass those views. He said sales of Alexion's drug Soliris have been strong, but he thinks new approvals may take more time than investors expect and the high price of Soliris could hurt its sales in some indications.

THE BIG PICTURE: Soliris is Alexion's only marketed drug. It was first approved in 2007 as a treatment for paroxysmal nocturnal hemoglobinuria, or PNH, which causes a breakdown of red blood cells and leads to anemia. In late 2011 it was approved as a treatment for atypical hemolytic uremic syndrome, or aHUS, which often leads to kidney failure and death.

Total sales of Soliris rose 44 percent to $294.1 million in the third quarter. Alexion expects $1.12 billion to $1.13 billion in annual revenue in 2012, and FactSet says analysts expect $1.13 billion, on average.

SHARE ACTION: Alexion shares fell $2.65, or 2.8 percent, to $90.94 in afternoon trading. The stock traded at an all-time high of $119.54 on Oct. 5, and at that time Alexion shares had climbed about 88 percent over the last year.

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