Wells Fargo Downgrades Cumberland Pharmaceuticals (CPIX) to Market Perform

Wells Fargo downgraded Cumberland Pharmaceuticals (NASDAQ: CPIX) from Outperform to Market Perform with a price target of $6.50 (from $8.50).

The firm comments, "Downgrading CPIX to Market Perform from Outperform on higher perceived risk to Acetadote. FDA approval of Innopharma's potential "generic" Acetadote raises questions about the sustainability of the Acetadote franchise. We expect CPIX to trade down on this news. Although CPIX has multiple avenues to defend Acetadote's exclusivity (and could ultimately be successful), the uncertainty is likely to remain an overhang on the stock until this situation is resolved, which is likely at least 12 months away. Therefore, we do not recommend buying the shares, despite the expected share weakness. Valuation range: $6-7 (1.0-1.5x 2012E Acetadote revenue, 1.0-2.0x 2012E Kristalose revenue, plus $3.31 net cash per share) from $8-9. Risks: more severe than expected competition for Acetadote, and deceleration of Kristalose and Caldolor.

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

Shares of Cumberland Pharmaceuticals closed at $5.49 yesterday.

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