Citi Sees Strong Upside At Watson Pharmaceuticals (WPI)

Citi Investment Research & Analysis analysts John Boris, Morten Marott, Timothy W Chou and Nirav Jhaveri rated shares of Watson Pharmaceuticals Inc WPI a Buy, with a price target of $48 per share. The analysts said that they still expect to see a strong 2011 from Watson Pharmaceuticals Inc, with significant upside from the expected approval the generic Concerta. The analysts also said they see upside from launches of high margin Watson Pharmaceuticals Inc products such as generic Cardizem LA, Ferrlecit and Pulmicort. The Citi Investment Research & Analysis analysts wrote, "we see upside to our estimates for WPI’s branded segment in 2010 with (1) Rapaflo having grown 32% in prescriptions YTD after the Flomax genericization and with (2) a possibly earlier than we have expected 3Q10 approval and launch of generic Ferrlecit and potential capturing of market share from Venofer. We estimate that every incremental $10M in Rapaflo sales relative to our estimate could add ~$0.01 in cash EPS, assuming 10% of sales in COGS & 15% in royalty to Kissei Pharma. In addition, we estimate and that every incremental $10M of generic Ferrlecit, at an expected 30% discount & 15% in royalties to GeneraMedix, would add ~$0.03 in cash EPS in 2010."