Citigroup Ups Watson Pharmaceuticals to 'In-Line'

Citigroup upgraded Watson Pharmaceuticals (WPI

) to in-line from underperform.

On Wednesday the company posted 44 cents first-quarter earnings per share on 18% higher revenues. Analyst Angela Larson says her upgrade was driven by valuation. She thinks Watson's valuation -- trading in-line with its peers -- is a reasonable reflection of the balance she believes exists between growth concerns (i.e. marketing capabilities, women's health risk) and opportunity for growth (Oxytrol launch, new generics.)

Larson notes her upgrade comes with some trepidation, as Watson's stock has a history of volatility, with mangement having missed guidance and expectations in the past. Still, she raised her $30 target to $34, with shares trading at 16.5 times her $2.04 2004 earnings per share estimate.