Markets & Finance

BofA Lowers Watson Pharmaceuticals to Neutral

Banc of America downgraded Watson Pharmaceuticals (WPI) to neutral from buy.

Analyst David Maris says the 39 cents to 41 cents second-quarter EPS outlook is significantly lower than his 51 cents estimate. The shortfall is attributed principally to weakness in the women's health business and sales of Oxytrol, a treatment for overactive bladder.

Maris says he had warned about a negative pricing environment, as well as the threat to Oxytrol, from the recently approved Sanctura drug. He believes both of these issues make for more challenges ahead. Maris thinks these uncertainties will be a challenge to manage, and with his patience worn thin, he downgraded the stock. He cut the 2004 and 2005 EPS estimate to $1.74 and $2.00, respectively. He also slashed the $46.50 target to $24.

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