UBS Financial downgraded Mylan Labs (MYL) to neutral from buy.
Analyst Steven Valiquette says he's downgrading on revised estimates for the company's generic Duragesic drug for pain. He had thought generic Duragesic would be a key catalyst for Mylan's stock, but an analysis of post-trial briefs leads him to believe that Mylan now has less than a 50/50 chance of winning a patent dispute with Johnson & Johnson.
Valiquette expects the patent ruling to occur in either December or January. He removed $50 million of generic Duragesic revenues from his fiscal 2004 (Mar.) estimate, and cut the $200 million fiscal 2005 generic Duragesic revenue estimate to $40 million.
He also lowered the $1.20 fiscal 2004 earnings per share estimate to $1.16, and trimmed the $1.45 fiscal 2005 estimate to $1.30. Finally, Valiquette cut the $31 target to $24.