Needham & Company Downgrades Optimer Pharmaceuticals (OPTR) to Hold on Weaker Dificid Sales; Says Takeover Hopes Dim

May 10, 2013 7:35 AM EDT Send to a Friend
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Price: $12.78 --0%

Rating Summary:
    4 Buy, 9 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 18 | New: 41
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Needham & Company downgraded Optimer Pharmaceuticals (NASDAQ: OPTR) from Buy to Hold following Q1 results which included weak Deficid sales.

Analyst Alan Carr comments, "Optimer reported $16.8M in 1Q13 Dificid net sales (16.9% y/y; 0% q/q), below our $20.5M and consensus ~$20M estimates.
Management cited destocking by wholesalers during the quarter as the cause and reported that demand grew 5% q/q. GAAP EPS was $(0.65). Although we believe Dificid is a well-differentiated effective drug, we are concerned by the current sales
trajectory. Several commercial strategy changes were implemented last Fall, but they have not yet had a material impact. The new management team believes additional changes implemented more recently may improve matters in 2Q13. Given current valuation ($620M EV), however, we believe it may be prudent to wait and see. We are downgrading to HOLD.

He continued, "The stock appears to have been largely driven by speculation around a potential acquisition of the company (+65% YTD). Optimer announced a review of strategic alternatives in late Feb 2013, including a potential sale. We believe Dificid may be a good fit with a half dozen companies, but note the challenges of attracting interest from unpredictable Big Pharma on reasonable terms. We recognize a sale of the company is a distinct possibility, but given the continuing Dificid trend, premium may be modest."

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

Shares of Optimer Pharmaceuticals closed at $14.92 yesterday.


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