UPDATE: Cantor Fitzgerald Downgrades Endo Health Solutions to Sell, Reiterates $30 PT Following Updated 2013 Guidance

In a report published Thursday, Cantor Fitzgerald analyst Irina Rivkind downgraded the rating on Endo Health Solutions ENDP from Hold to Sell, but reiterated the $30.00 price target. In the report, Cantor Fitzgerald noted, “Management announced planned 2014 operating expense reductions of $325M relative to 2012 (more than we had been expecting) and updated 2013 guidance to $2.65-2.80B in sales and $4.10-$4.40 in earnings. We think earnings guidance is beatable (which may already be expected) and model 2.76B and $4.71. This assumes revenue declines associated with Opana ER and Healthtronics and operating expense cuts of $144M from 2012 (relative to guidance of $150M). Management also plans to divest Healthtronics and early-stage pharmaceutical assets and to use the proceeds along with existing debt capacity for 2-3 small tuck-in acquisitions in the $250-500M range over the next 12-18 months. Management disappointingly opted not to divest its AMS device business and pay down debt. We now expect a prolonged restructuring period rather than an outright company sale or rapid debt pay-down and are returning to a DCF valuation for the company, which generates a valuation in the $30-range (even with credit for $200M in Aveed revenues) and supports our downgrade from HOLD to SELL.” Endo Health Solutions closed on Wednesday at $35.96.