Bank of America: Warner Chilcott's Theoretical Value Higher than Standalone Target

In a research report released this morning by Bank of America, Warner Chilcott

announced that it is exploring a range of strategic alternatives to enhance shareholder value. According to Bank of America, "While it is difficult to predict the potential outcome of the strategic review, the process is consistent with our view that building shareholder value is a priority for the company, which has been a key element of our Buy thesis. Our PO of $23 is based on a sum-of-the-parts DCF model for standalone WCRX that includes no significant SG&A cuts as products go generic as well as R&D growth despite no new launches. We note that there could be substantial upside to the DCF value with expense cuts, which could materialize in a sale scenario." Warner Chilcott closed yesterday at $21.81.