King Pharmaceuticals, Inc. (KG)

TrackZacks (79.37) Submitted: 6/21/07 5:56 PM : Start Price: $20.51 KG Score: 29.45

Sell King Pharmaceuticals

Posted Thu Jun 21, 09:14 am ET
by Zacks Equity Research

Though in recent weeks shares of King Pharmaceuticals (KG) have appreciated in price, Zacks senior pharmaceuticals analyst Jason Napodano, CFA is keeping his Sell rating on KG at this time. To find out why, we looked into this morning's updated report:

"King Pharmaceuticals, Inc. is a vertically integrated pharmaceutical company that focuses on developing and marketing branded prescription pharmaceutical products. Most of the company's key products are either facing increased competition or generic threat. Additionally, we are concerned about declining prescription trends for most of these products.

"We believe that generic threat and mounting competition will continue to hinder both top- and bottom-line growth going forward. As such, we are maintaining our Sell rating with a $16 target.

"Both top-line and bottom-line growth will be hard to come by in the face of increasing competition and lack of meaningful new products in the portfolio. King recently acquired pain drug Avinza, from Ligand. While this deal should be accretive from 2007, we remain cautious on the long-term fundamentals of the company. We believe that generic threat and competition will continue to hinder the company going forward. Based on our model, we see a 5-year EPS CAGR [earnings per share compound annual growth rate] of -6%."

Read the analyst report on KG
http://www.zacks.com/ZER/zer_comp_reports.php?f_ticker=KG&f_report_type=&f_bsh=&f_period=7&f_industry=

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