Leerink Swann Starts Watson Pharmaceuticals (WPI) at Market Perform; Business Looks Fairly Valued
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Price: $85.73 --0%
Rating Summary:
13 Buy, 4 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
13 Buy, 4 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Leerink Swann initiates coverage on Watson Pharmaceuticals (NYSE: WPI) with a Market Perform.
Leerink analyst says, "WPI offers: (1) solid double-digit Y/Y EPS growth through '13E; (2) potential upside opportunity from competitor delay on Lipitor generic; (3) Prochieve – potential first FDA-approved progesterone supplement for prevention of preterm birth in women with short cervix. These factors are evenly balanced by: (1) lack of business diversity with ~70% of current net profits derived from the U.S. generic segment; (2) we believe the Concerta & Lidoderm opportunities are largely factored into EPS but downside risks exist in 2012-13; and (3) low visibility on U.S. generic pipeline growth drivers in 2013+. Our 2011-13E and 2011-15E cash EPS CAGR's are 19% and 10%, but WPI trades at the highest premium to the S&P 500 vs. peers. Our '12E P/E of 13x, applied to EPS after subtracting payment to Arrow, suggests valuation of $64-$65/share."
For more ratings news on Watson Pharmaceuticals click here and for the rating history of Watson Pharmaceuticals click here.
Shares of Watson Pharmaceuticals closed at $64.17 yesterday.
Leerink analyst says, "WPI offers: (1) solid double-digit Y/Y EPS growth through '13E; (2) potential upside opportunity from competitor delay on Lipitor generic; (3) Prochieve – potential first FDA-approved progesterone supplement for prevention of preterm birth in women with short cervix. These factors are evenly balanced by: (1) lack of business diversity with ~70% of current net profits derived from the U.S. generic segment; (2) we believe the Concerta & Lidoderm opportunities are largely factored into EPS but downside risks exist in 2012-13; and (3) low visibility on U.S. generic pipeline growth drivers in 2013+. Our 2011-13E and 2011-15E cash EPS CAGR's are 19% and 10%, but WPI trades at the highest premium to the S&P 500 vs. peers. Our '12E P/E of 13x, applied to EPS after subtracting payment to Arrow, suggests valuation of $64-$65/share."
For more ratings news on Watson Pharmaceuticals click here and for the rating history of Watson Pharmaceuticals click here.
Shares of Watson Pharmaceuticals closed at $64.17 yesterday.
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