Banc of America downgrades generic drug-maker Forest Labs (FRX) to sell from neutral.
Analyst David Maris says he is downgrading Forest Labs due to risks tied to the upcoming Lexapro trial and the earlier-than-expected entrance of generic drug Celexa. Based on his initial analysis of the upcoming May 2005 Lexapro trial with Ivax Corp., he believes there's credible risk to Lexapro.
Maris assigns a 25% chance for trial loss, which leads him to cut his $45 target to $34. He says, with Forest Lab stock trading near its peer multiple of 16 times 2005 estimates, he believes the market has only begun to consider risk to Lexapro. He adds that, without Lexapro, he estimates that Forest Labs shares may be worth $11.45.