UPDATE: Bank of America Raises PO to $93 on Watson Pharmaceuticals Following Lidoderm Settlement

Bank of America reiterates its Buy rating on Watson Pharmaceuticals

and raises its price target from $92 to $93. Bank of America comments, "Following WPI's settlement with ENDP on Lidoderm (pain patch), we added sales of the product to our WPI model beginning in 2013 (brand from Jan-13; generic from Sep-13 per terms). We had previously assumed a WPI launch of ENDP's authorized generic (AG) in mid-14 (a settlement scenario). In our view, getting $96mn (WPI will sell ENDP's brand until 9/15/13 at 100% margin) seems reasonable as it creates certainty for WPI by removing legal variables and also creates visibility around 2013. We raised our 2013/14E EPS to $7.16/$7.72 from $6.48/$7.60 and raised our DCF-based PO to $93 (from $92). We are maintaining our Buy rating based on our view that WPI is a well-managed company and because recent business development activities place WPI in a position to become significantly stronger both from an operational and financial standpoint." WPI closed at $73.84 on Tuesday.