Biotech Values

[DewDiligence]

MON:

So then the implicit forecast for 2012 was cut ~50%?

Not exactly. The prior FY2012 guidance did not include an EPS forecast per se, but rather an amount of gross profit—the line on the P&L that comes before SG&A, R&D, interest, and taxes. Various analysts had modeled what the prior gross-profit guidance implied vis-à-vis non-GAAP EPS and came up with figures for FY2012 ranging from $4.75-6.00. Hence, the $4.10 midpoint of the new FY2012 EPS guidance range of $3.96-4.24 is roughly a 15-30% cut relative to analysts’ prior models.

How did this result in a positive reaction? Did no one believe the "double 2007 income in 2012" forecast in the first place?

I suspect that few if any analysts and institutional investors accepted the prior FY2012 guidance, hook, line, and sinker.