Jefferies Cuts Price Target on Kensey Nash (KNSY), Sees St. Jude (STJ) Winning

Jefferies is reaffirming its Hold rating on shares of Kensey Nash (NASDAQ: KNSY) following management's announcement that the company has entered mediation with St. Jude (NYSE: STJ) over future and prior Angio-Seal royalties. The firm also reduced its price target from $23 to $21.

KNSY reports STJ has misunderstood the prior agreement and notes royalties should have been paid at a rate of 8 percent as opposed to the pre-existing 6 percent which has been paid since 2007. STJ believes royalties under the prior
license agreement will decline to 2 percent from the current 6 percent effective November ’11. The firm calculates $18.4 million in Angio-Seal royalty revenues is up for grabs.

An analyst at Jefferies comments, "For conservatism, we are modeling in the lower 2 percent royalty rate, which assumes that STJ will be successful in mediation."

Along with the announcement that the two companies have entered mediation, management at KNSY also announced it has suspended its FY12 guidance and cut its second quarter sales and earnings expectations from $12.8-$13.3 million and $0.61-$0.64 per share to $11.0-$11.5 million and $0.47-$0.50 per share.

Jefferies has cut its Q2 and FY12 EPS estimates from $0.61 and $1.90 to $0.57 and $1.73. For FY13, the firm also lowered its EPS estimate from $2.13 to $1.90.

For an analyst ratings summary and ratings history on Kensey Nash click here. For more ratings news on Kensey Nash click here.

Shares of Kensey Nash closed at $20.75 yesterday.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Is Treasury selloff a major issue for stock market bulls?
• Seaport Global Securities Downgrades JetBlue Airways (JBLU) to Neutral
• DA Davidson Reiterates Neutral Rating on Brunswick Corp (BC)