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Biotech / Medical : WPI Watson Pharmaceuticals -- Ignore unavailable to you. Want to Upgrade?

To: Doughboy who wrote (45)	4/12/1999 10:10:00 PM
From: Zebra 365	Read Replies (2) \| Respond to of 61

S&P on WPI, (earnings out later this month expected 0.41 up from 0.34 in 1998.) Fueled by the company's pipeline of complex generic drugs and an aggressive expansion program, earnings have grown dramatically in recent years. We expect the trend of strong earnings growth to continue in 1999, reflecting new product introductions and greater contributions from the acquisition of Hoechst Marion Roussel's generic drug operations in March 1998. Volume should also be augmented by the recent acquisition of TheraTech and the purchase of three oral contraceptive products from G.D. Searle (a division of Monsanto). Although TheraTech is not likely to become accretive to earnings until 2000, margins in 1999 should benefit from the better volume and a larger proportion of higher-margined branded drugs in the sales mix. We expect EPS to reach $1.75, up from 1998's $1.46 (before nonrecurring charges). The shares have been in a strong uptrend over the past 18 months, although they have weakened somewhat to date in 1999. The recent weakness partially reflected the receipt of warning letters from the FDA, and some narrowing in gross margins and very modest sequential sales growth in the fourth quarter of 1998. However, the company's strong earnings momentum should be maintained over the coming years, boosted by several new products and a rising proportion of higher-margined branded products in the overall sales mix. Although it is expected to be earnings neutral in 1999, recently acquired TheraTech should significantly enhance WPI's proprietary drug delivery pipeline. TheraTech has four marketed products and over 20 in development. WPI has 16 generic applications and five Dividend Data branded drug applications presently under review at the FDA. The shares merit accumulation. S&P EPS Est. 1999 1.75 Tang. Bk. Value/Share 3.65 WPI's P/E on S&P Est. 1999 25.5 Beta 0.72 Shs. outstg. (M) 95.1 Market cap. (B) $ 4.3 FIRST CALL The mean recommendation of 9 brokers is 1.3 with a range of 2.0 to 1.0 (1.0 is best, 5.0 is worst) And, as I reported earlier, WPI is now part of S&P 500 as of Monday, April 12th Not Flashy but a small part of core, with positive trends. Target still 60. Zebra