Monday, January 24, 2011

Cubist Pharmaceuticals (NASDAQ:CBST) Driven by Teva Litigation

The narrative going forward for Cubist Pharmaceuticals (NASDAQ:CBST) will primarily be litigation with Teva, and not the rate of growth of Cubicin in 2011; at least for the next several months.

Needham says, "Management appears to have cautiously optimistic expectations for a number of recent and to-be-implemented marketing efforts designed to maintain Cubicin growth in 2011. Our new 2011 U.S. Cubicin sales estimate is $657.0MM. Notwithstanding somewhat low Cubicin sales guidance for this year, litigation with Teva is likely to drive the stock for the next several months. We are generally favorably inclined and believe there is an attractive risk benefit at the stock’s current valuation ($900MM EV).

"Our 2011 and 2012 total revenue estimates are $693.9 (was $697.0MM) and $761.0MM (was $762.0MM). Our new 2011 and 2012 GAAP EPS estimates are $0.85 (was $1.66) and $1.29 (was $1.81), respectively, reflecting accounting items tied to convertible notes and the Calixa earn-out."

Needham & Company maintains a "Buy" rating on Cubist Pharmaceuticals (CBST), which closed Friday at $22.21, gaining $1.01, or 4.76 percent. Needham has a price target on Cubist of $27.

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