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Tuesday, April 15, 2008 1:27:21 PM
Forest Issues Tepid Guidance
[Bystolic isn’t selling well but it’s still a great brand name, IMO
]
http://www.reuters.com/article/marketsNews/idINN1544153920080415
>>
Tue Apr 15, 2008 9:54am EDT
NEW YORK, April 15 (Reuters) - Forest Laboratories Inc (FRX) on Tuesday posted a better-than-expected profit, but shares fell 5 percent as the mid-sized drugmaker projected only slightly higher fiscal-year earnings on disappointing revenue.
Forest also projected sharply higher spending on research and development as it tries to improve its product line ahead of losing exclusive U.S. rights to its two biggest drugs early next decade.
"I thought there was more earnings power that the company was going to show in fiscal '09, and I would say that is pretty disappointing," Leerink Swann analyst Gary Nachman said.
The New York-based company projected fiscal-year earnings of $3.10 to $3.20 per share, up only slightly over the $3.06 it posted for its 2008 fiscal year.
It projected revenue up nearly 4 percent, to about $3.99 billion, short of the $4.16 billion expected by analysts on average, according to Reuters Estimates.
Nachman, who expected earnings of $3.55 per share for 2009, said the prime reason for the shortfall was lower-than-expected sales of Forest's new hypertension treatment, Bystolic. Forest projected $60 million in sales, while Nachman expected $150 million.
The drugmaker reported a fiscal fourth-quarter profit of $172.8 million, or 55 cents per share. That compared with a net loss of $237.9 million, or 75 cents per share, a year ago, when Forest took a big charge for an acquisition.
Excluding a 35-cent per-share charge for a licensing payment, earnings of 90 cents were 12 cents ahead of the average estimate from analysts, according to Reuters Estimates.
Revenues for the quarter rose 12 percent to $990.9 million. Sales of the anti-depressant Lexapro rose 9 percent to $577.2 million. Sales of Alzheimer's treatment Namenda climbed 26 percent to $179.7 million.
Lexapro and Namenda are both expected to lose U.S. patent protection early next decade, leading to competition from low-cost generic drugs that will leave a huge hole in the company's revenue.
To respond, Forest has been seeking deals to boost its experimental product line. It projected a 27 percent jump in research and development spending to $625 million for the fiscal year, as it invests in five late-stage projects.
Sales, general and administrative spending is expected to rise about 12 percent, Forest said, as it markets Bystolic and plans to launch milnacipran for the pain condition fibromyalgia.
"Even with a lower top line than what people expected the expense levels are still pretty robust," Nachman said. "They have to do it. Strategically it's the right decision, and they're willing to take the pain in the earnings in the near term."
Shares fell $2.03 to $37.78 in morning trading on the New York Stock Exchange. The stock is up 4 percent in 2008.
<<
[Bystolic isn’t selling well but it’s still a great brand name, IMO
] http://www.reuters.com/article/marketsNews/idINN1544153920080415
>>
Tue Apr 15, 2008 9:54am EDT
NEW YORK, April 15 (Reuters) - Forest Laboratories Inc (FRX) on Tuesday posted a better-than-expected profit, but shares fell 5 percent as the mid-sized drugmaker projected only slightly higher fiscal-year earnings on disappointing revenue.
Forest also projected sharply higher spending on research and development as it tries to improve its product line ahead of losing exclusive U.S. rights to its two biggest drugs early next decade.
"I thought there was more earnings power that the company was going to show in fiscal '09, and I would say that is pretty disappointing," Leerink Swann analyst Gary Nachman said.
The New York-based company projected fiscal-year earnings of $3.10 to $3.20 per share, up only slightly over the $3.06 it posted for its 2008 fiscal year.
It projected revenue up nearly 4 percent, to about $3.99 billion, short of the $4.16 billion expected by analysts on average, according to Reuters Estimates.
Nachman, who expected earnings of $3.55 per share for 2009, said the prime reason for the shortfall was lower-than-expected sales of Forest's new hypertension treatment, Bystolic. Forest projected $60 million in sales, while Nachman expected $150 million.
The drugmaker reported a fiscal fourth-quarter profit of $172.8 million, or 55 cents per share. That compared with a net loss of $237.9 million, or 75 cents per share, a year ago, when Forest took a big charge for an acquisition.
Excluding a 35-cent per-share charge for a licensing payment, earnings of 90 cents were 12 cents ahead of the average estimate from analysts, according to Reuters Estimates.
Revenues for the quarter rose 12 percent to $990.9 million. Sales of the anti-depressant Lexapro rose 9 percent to $577.2 million. Sales of Alzheimer's treatment Namenda climbed 26 percent to $179.7 million.
Lexapro and Namenda are both expected to lose U.S. patent protection early next decade, leading to competition from low-cost generic drugs that will leave a huge hole in the company's revenue.
To respond, Forest has been seeking deals to boost its experimental product line. It projected a 27 percent jump in research and development spending to $625 million for the fiscal year, as it invests in five late-stage projects.
Sales, general and administrative spending is expected to rise about 12 percent, Forest said, as it markets Bystolic and plans to launch milnacipran for the pain condition fibromyalgia.
"Even with a lower top line than what people expected the expense levels are still pretty robust," Nachman said. "They have to do it. Strategically it's the right decision, and they're willing to take the pain in the earnings in the near term."
Shares fell $2.03 to $37.78 in morning trading on the New York Stock Exchange. The stock is up 4 percent in 2008.
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