This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Nerves Frayed at Forest

June 30 was the end of Forest's first quarter, and the Wall Street consensus calls for a profit of 51 cents a share on revenue of $785.9 million, according to Thomson First Call. The estimate excludes items. For the same period last year, Forest earned 52 cents a share, excluding special items, on revenue of $711.8 million.

Forest's revenue and profit for the 2006 fiscal year declined from the previous year. One major reason was the dramatic erosion in sales of the antidepressant Celexa, a Lexapro predecessor. Forest knew Celexa would lose its patent, whereas the company is fighting Teva to keep Lexapro's U.S. patent for at least another four years. Forest licenses Lexapro from the Danish company H. Lundbeck, which has joined Forest in suing Teva.

Several brand-name drug companies have decided to settle with generic challengers, thus preventing an all-or-nothing outcome, but in this case, Forest is following the Pfizer and Lilly strategy of fighting in court.

Forest did settle a Lexapro patent challenge in October with the Australian generic-drug company Alphapharm. Analysts say the Teva litigation presents a greater problem than the Alphapharm dispute.

Pipeline Prospects

The possibility for a settlement with Teva "remains in the cards, particularly given the devastating downside should Forest Laboratories lose, though visibility here is low," says Elliott Wilbur of CIBC World Markets in a June 22 research report. Wilbur, who doesn't own shares, has a sector-perform rating on Forest. His firm says it seeks to do business with companies covered in its research reports.

"We strongly believe Forest will win the case," says Marc Goodman of Credit Suisse. He recently initiated coverage of Forest with an outperform rating. He tempered his enthusiasm by saying the risk-return on the stock "is not favorable" because a win could boost shares by 15% to 20%, while a loss could deflate the stock by 50%.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
FRX $99.00 -0.77%
LLY $72.47 0.00%
PFE $35.04 0.00%
AAPL $124.75 0.00%
FB $80.78 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs