NEW YORK (AP) — Citi Investment Research & Analysis is looking for a strong showing from major generic drugmakers who will soon report fourth quarter results, thanks to a myriad of positives including new product launches and growing U.S. sales.
However, analyst John Boris downgraded Watson Pharmaceuticals Inc. Tuesday based on its guidance, following a number of other industry watchers who have cut profit forecasts for the company due to a regulatory decision released Friday.
Still, Watson, Mylan Inc., and Teva Pharmaceutical Industries Ltd. should beat expectations in the fourth quarter, Boris said, who said he expects strong outlooks for 2012. Teva should post at the high end of its annual forecast, he said.
Mylan and Teva will report their fourth-quarter results in February. Watson did that Tuesday, and Boris said he was disappointed by the company's projected growth for 2012 and 2013.
Watson expects an adjusted profit of $5.25 and $5.55 per share in 2012, which was well below the $5.76 per share predicted by Wall Street. The company said its profit will grow about 10 percent in 2013.
Analysts have sharply cut their profit forecasts for Watson since Friday, when a panel of Food and Drug Administration advisors said it does not think the company's drug candidate Prochieve is effective at preventing premature birth. According to FactSet, estimates for Watson's profit in 2012 are down by 7 cents and estimates for its 2013 profit are down 15 cents, to $5.97 per share from $6.12.
Boris cited the Prochieve recommendation and competition to Watson's extended-release drugs in downgrading the stock to "Neutral" from "Buy" and lowering his price target to $59 per share from $79. He said he now expects Watson to earn $5.40 per share in 2012, down from $5.83.
Shares of Watson lost $1.52, or 2.7 percent, to $55.69 in afternoon trading. Earlier the stock fell as much as 3.9 percent.
The analyst rates Mylan and Teva at "Buy." He said he expects Mylan's strong U.S. business to help make up for weaker results in Europe, and said Mylan's profit will get a boost from generic versions of the diabetes treatment Actos, sleep disorder drug Provigil, and antidepressant Lexapro. His rating on Teva is based on its recent acquisitions of drugmakers Cephalon and Taiyo, its upcoming generic version of the anti-psychotic drug Zyprexa, and its multiple sclerosis drug Copaxone.
Boris said sales of Copaxone could be aided by safety concerns surrounding a competing drug, Novartis AG's Gilenya.
He said he thinks Mylan will an annual profit of $2.30 to $2.50 per share. Teva has said it expects to earn $5.48 to $5.68 per share in 2012, and Boris says Teva should reach the high end of that outlook. On average, analysts expect Mylan to earn $2.39 per share and are estimating a profit of $5.61 per share for Teva.
Mylan shares slipped 48 cents, or 2.2 percent, to $21.04, and Teva shares declined 13 cents to $45.70.
There are no comments yet