Leerink Swann Drops Questcor (QCOR) to Market Perform; Cites Broader Acthar Risk

September 24, 2012 7:54 AM EDT Send to a Friend
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Price: $93.60 --0%

Rating Summary:
    7 Buy, 9 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 20 | Down: 40 | New: 50
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Questcor Pharma (Nasdaq: QCOR) shares are lower on the session Monday amid a new downgrade by Leerink Swann. The firm cut its rating on Questcor from Outperform to Market Perform, dropping its DCF valuation from $56.50 to about $35.

Leerink is making the call on potentially increased Acthar reimbursement risk. The firm commented, "Initial contact with Aetna and Blue-Shield general information lines suggested to us Acthar would continue being reimbursed as a last resort therapy for approved indications (MS, Nephrotic Syndrome, etc.) beyond Infantile Spasm (IS). Subsequently, we spoke directly with Aetna management who indicated they effected a policy change and will no longer be covering Acthar beyond IS, but their general computer formularies had not yet been updated."

Aetna (NYSE: AET) recently dropped coverage for Acthar following price increases, lack of clinical data supporting approved indications, lack of National Medical Socities support, and other recent publicity.

Leerink's new valuation stems from an increased discount rate by 4 points to 16 percent while lowering revenue projections. For FY13, Leerink sees revs of $621.8 million, from $675.8 million prior. EPS moves from $4.53 down to $3.98, versus the Street at $4.18.

For an analyst ratings summary and ratings history on Questcor Pharmaceuticals click here. For more ratings news on Questcor Pharmaceuticals click here.

Shares of Questcor Pharmaceuticals closed at $30.13 yesterday.


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