Leerink Swann Downgrades Hospira (HSP) to Market Perform, Cuts Price Target by 40%

Leerink Swann downgraded shares of Hospira (NYSE: HSP) to a Market Perform rating from its previous rating of Outperform due to the company's pre-announced Q3 results. The firm is also cutting its price target from $50 to $30.

Management reported that sales look to be $977 million for the quarter with $0.66 per share in earnings. These figures are well below the firm's previous estimates of $1.07 billion in sales and earnings of $0.90 per share.

The company noted that the weak numbers are due to new challenges in resolving the company's quality issues and warning letter at its Rocky Mount NC manufacturing facility. HSP's Rocky Mount NC manufacturing facility accounts for roughly 25 percent of the company's total sales.

An analyst at Leerink Swann comments, "With resolution likely to spill into 2012 and full resolution perhaps not until late 2012/early 2013 we are moving to the sidelines until we can gain greater clarity on the specific actions, costs, and time required to fully complete and resolve the process."

The firm is cutting its 2011, 2012, and 2013 earnings per share estimates from $3.90, $3.90, and $4.45 to $2.95, $2.75, and $3.05.

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

Shares of Hospira closed at $37.36 yesterday.

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