Piper Jaffray Reiterates Overweight Rating, $103 PT on Watson Pharmaceuticals
In a report published Wednesday, Piper Jaffray & Co. reiterated its Overweight rating and $103.00 price target on Watson Pharmaceuticals (NYSE: WPI).
Piper Jaffray noted, “On Monday, Mallinckrodt (Covidien's pharma business) became the first filer to gain approval of a Concerta generic. While the approval comes as a surprise to us, Watson had long ago set expectations that a second entrant to the Concerta market would happen in 2013. WPI's guidance had already reflected one additional competitor in 1Q13, and most Street estimates (including ours) factor in further competition beyond 2013. With other high-value generics providing significant contribution (i.e. Lidoderm, Adderall XR) or providing the potential for longer-term upside (e.g., Intuniv), we continue to believe WPI earnings are still likely to approach $10 per share by 2014. With a 2014 P/E of 9x in the context of numerous high-value generics opportunities and compelling synergies from the Actavis transaction, we believe WPI shares are valued attractively. We reiterate our Overweight rating and $103 price target.”
Watson Pharmaceuticals closed on Monday at $86.00.
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