Forest Labs and Watson Pharma to Open Near 52-Week Highs

Forest Laboratories FRX and Watson Pharmaceuticals WPI reached new 52-week highs of $40.52 and $66.00 per share, respectively, in Wednesday's trading session. Forest Labs saw an upgrade from Argus and Duncan-Williams upgraded its price target on the stock to $45 in the wake of activist investor Carl Icahn's recent interest in the company. Forest Labs develops and manufactures name-brand as well as generic prescription and over-the-counter pharmaceutical products. It has a market cap of $11.4 billion. Its return on equity is 15.5% and the price-to-earnings ratio is 9.0. Short interest tumbled in March and is now about 4% of the float. The stock is about 25% higher year to date, outperforming competitors Eli Lilly LLY and GlaxoSmithKline GSK, as well as the broader markets. Watson saw a favorable ruling from a U.S. District Court in a patent infringement suit, and the company also just announced expansion plans for its R&D facility in Salt Lake City. The company has a market cap of $8.3 billion, and it develops, manufactures and markets globally generic and brand-name drugs focused on urology and women's health. The company has a P/E ratio that is much lower than the industry average, a PEG ratio of 1.1, and its long-term EPS growth forecast is 12.4%. The share price is up more than 26% since the beginning of the year, outperforming competitors Novartis NVS and Teva Pharmaceutical TEVA, as well as the broader markets, in that time.