Barclays Maintains an 'Equalweight' on Forest Laboratories (FRX); Long-Term Outlook Clearer; Thesis Unchanged

Barclays maintains an 'Equalweight' on Forest Laboratories (NYSE: FRX), PT $38.

Barclays analyst says, "Post-Lexapro patent expiry earnings picture becomes clearer but investment thesis remains unchanged: While FY12 revenue and EPS guidance came in slightly below expectations, in our view, the outlook for post FY13 is the key focus for investment community. With yesterday's much awaited (but not expected) FY13/"trough year" EPS guidance and some spend detail, we now have a base for post FY13 growth -- the biggest incremental from yesterday's call, in our opinion. Nevertheless, valuation on trough earnings continues to support our 2-EW rating. Revisiting rating may require more meaningful drivers beyond current expectations for pipeline opportunities. Possibilities include additional new product in-licensing activities and/or a strategic acquisition, although we view the latter as least likely among options."

"Model revisions reflect higher spend assumptions in FY12 and higher revenue
estimates for FY13: For FY12, our EPS estimate declines to $3.67 from previous $4.22, driven by higher SG&A, R&D and tax rate, and lower Benicar royalties, partially offset by lower share count. For FY13, we are raising our EPS estimate to $1.21 from $1.09, with increase attributable to higher net sales and interest and other income, partially offset by higher SG&A, R&D and tax rate, and lower Benicar royalties."

For more ratings news on Forest Laboratories click here and for the rating history of Forest Laboratories click here.

Shares of Forest Laboratories closed at $33.38 yesterday.

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