Baird Maintains a 'Neutral' Rating on Cephalon (CEPH), Reslizumab Mixed Results in EE Sets Back Potential for Upside

November 23, 2009 10:42 AM EST

Baird maintains a 'Neutral' rating on Cephalon, Inc. (Nasdaq: CEPH), price target $59.

Baird analyst says, "While reslizumab was not in the Street's estimates, this eliminates one of the only sources of near-/intermediate-term upside (without additional business development) and may increase focus on a challenging growth picture. Some may view this negatively for CEPH's strategic move toward higher unmet need areas/biologics, but we still like that and view more as highlighting the longer odds for success pre-Phase 2 proof-of-concept...We like the direction in which CEPH has gone here, targeting higher-barrier biologics and areas of unmet medical need. However, investors have little to go on to this point and are thus likely to remain in show-me mode until more data is available. First on deck is reslizumab, with Phase 2/3 data coming in late-09/early-10 and filing to follow if that data is positive. CEPH views this as a $500+M type opportunity in eosinophilic esophagitis (EE) alone, which our valuation work suggests could be worth $3-10/share depending on whether investors award a specialty pharma multiple or a biotech multiple."

To see all the upgrades/downgrades on shares of CEPH, visit our Analyst Ratings page.

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• Robert W Baird

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