UPDATE: Stifel Downgrades Salix Pharmaceuticals Ltd. to Hold, Removes PT as Uncovered Inventories Leaves Many Open Questions

In a report published Friday, Stifel analyst Annabel Samimy downgraded the rating on

from Buy to Hold, and removed the $185.00 price target. In the report, Stifel noted, “SLXP reported 3Q14 mired in more wholesaler inventory issues, an audit, and a CFO resignation. Reported revenues fell well below expectations at $355mn (Consensus $392), seemingly from lower-than-expected sales of key products, higher-than-budgeted wholesaler discounts, and higher rebates on SNTS products. Surprisingly, EPS were in line with guidance at $1.53. Though demand for the products remains robust (based on prescription trends), given the revelation of enormous wholesaler inventories that have to work out of the channel (as much as nine months for Xifaxan and Apriso), we no longer have faith in SLXP's past demand or inventory calculations. Furthermore, lack of clarity on the pace of inventory work down injects significant ambiguity in the numbers. We have lost confidence in our projection abilities and do not expect clarity for several quarters. We downgrade to Hold.” Salix Pharmaceuticals Ltd. closed on Thursday at $138.55.