UPDATE: Shares of Sagent Pharmaceuticals Respond to Bank of America's Upgrade

In a report published Friday, Bank of America Merrill Lynch analyst Gregg Gilbert upgraded

from Neutral to Buy and lowered the price target from $26.00 to $25.00 noting favorable risk-reward on the stock's pullback. Gilbert commented on the limited downside if Sagent's quarterly performance remains consistent and no new negatives develop. The analyst noted that shares could improve over the next twelve months “with (1) the stock at a much lower level, (2) better clarity around the “base” business following several decent quarters, and (3) investors likely already expecting numbers to come down on product approval delays.” Bank of America remarked on the possibility for “significant” volatility on Tuesday, February 11 surrounding management's conference call and 2014 guidance. The analyst remains favorable of Sagent's injectables space. Gilbert commented, “While SGNT still feels more “virtual” than the companies that have been acquired, the company has made good progress on its vertical integration goals (buying its Chinese JV KSCP) and could be a deal or two away from investors perceiving SGNT's business model as less virtual and more concrete. With $137mn in net cash (as of 9/30/13), management could do some interesting things and we do not assume a material return on that cash in our valuation (beyond the cash itself).” Bank of America revised their model to account for no new product sales in 2014 and slower launch activity. 2014 and 2015 estimated sales were lowered from $287 million to $250 million, and from $356 million to $291 million, respectively. Gross margins for 2014 decreased from 29.6% to 28.4%, and were lowered from 32.9% to 31.2% in 2015. Shares of Sagent Pharmaceuticals closed at $19.81 on Thursday and are currently trading up 4.09% only five minutes after the opening bell.