Feuerstein was first to report the reaction at 9:10 in the morning on Friday. Too bad I missed it - might have saved some money as I tried to sell puts into the move and lost all my profits on worthless expirations for the week. Analysts estimates of Xop impact range from 25-35% of gross Xop revenues or $125-200 MM. Estimates come down $0.30-1.00+ per year depending on the year and the previous assumption. New price for category is weighted average price of Xop neb and generics so not a full move down. My editorial comment - SEPR has stated previously they will discontinue the channel however given potential impact on other channels.
Here are the research headlines:
DB Surprising timing of CMS Decision Clips Shares - keeps buy rating with price target way down to $59 (was much higher). They use 22x actual estimated 2008 EPS of $2.67 (not fully taxed). They question if decision will stick given June 20 decision date. New estimates for 2007-2009 are: $1.98, $2.67 and 3.41 with fully taxed at $1.29, 1.88 and 2.64.
CS Now Assuming Worst Case Xopenex Decision - downgrade to neutral. Target to $47 from $65 based on 25x taxed 2008E EPS of $1.87 (actual estimate is $2.70). New estimates for 2008-2010 are: $1.87, 3.06 and 3.65 for fully taxed and 2.70, 4.35 and 5.50 for reported.
JP Xopenex Loses Air with Reimbursement Code Change - keeps neutral and questions what this means given the June 20 date. They did not lower estimates yet. Estimates remain at: 2.37 and 3.92 for reported 2007E and 2008E EPS.
Stanford Group Relatively Little Downside from Current Levels: Lowering Price Target to $61 from $68. No longer value based on takeout. Lower 2007E but keep 2008 since assumed this decision but at later date. They value at 25x reported 2008E EPS of $2.94 discounted one period at 20%. I must say their reporting of estimates is strange calling fully taxed GAAP and not reported non-GAAP. Their estimates for 2008-2010 are: 2.69, 3.50 and 4.23 for full taxes and 2.94, 3.74 and 4.46 for reported.
Natexis Xopenex Reimbursement Cut but Will It Stick? Lowered target to $50 from $56. Remember these are guys who expect generic Xopenex in 2010. They give 3 reasons there was an over-reaction: (1) May not be final decision, (2) NPV not that bad given generics in 2010, and (3) Takeout becoming more interesting providing a floor. Estimates go to $2.48, 2.57, 2.68, 1.65 (generics hit in 2010) and $1.12. They have peak sales estimates of: L $740, Xop $600, HFA $309, Brovana $275 and royalties $40.
Wachovia Xopenex Reimbursement Uncertainty Creates Additional Risk Uncertain how final decision is - impacts revs by $80 for 2H 2007 and EPS by $0.61. Valuation: $47-51.
Sanford Bernstein Medicare Reimbursement Reduction Knocks the Air Out of Xopenex; Moving to Exclude CMS-Reimbursed Revenue - Lowers target to $48 from $57. They assume 20% of Xop hit. They lop $0.64-66 off of 2008 and 2009 EPS. They wonder if with this and the EPO decision, CMS is not going to start behaving in a more pharmoeconomic manner. They also make comment about "assuming the coverage decision is indeed as it appears."
Baird Confusion Reigns on Xopenex Medicare Reimbursement They reiterate Outperform and lower target to $67 from $82. They have 2.87 in 2008. $75 MM in 2007 and $150 MM in 2008.
Jon
PS Remember the EPS above all also have $0.40 of options expense. |
