The restatement remarks, which attracted several lawsuits, didn't cause analysts to change their views that Medicis faces challenges in defending its turf while trying to expand its offerings. About one-third of Medicis' revenue comes from the dermal filler Restylane. While Botox works on forehead wrinkles, dermal fillers are targeted for lines around the mouth and nose.
Analysts at Credit Suisse and Roth Capital Partners recently issued reports warning that Restylane sales will be squeezed by a weaker economy and stronger competition. Allergan has a new dermal filler, Juvederm, and Mentor has a new one called Prevelle Silk. Mentor has completed clinical trials on two other dermal fillers.
Medicis also is awaiting an FDA verdict on Reloxin, a potential challenger to Botox. The FDA rejected the Reloxin application earlier this year. The application has been refiled, and analysts expect the drug to reach the market next year. Any delay "might give Allergan a lead that Medicis can never get back," Viksjo says in a recent report.
Another issue is the acne drug Solodyn, a rising star that also is subject of a patent challenge. Viksjo says the patent dispute is complex, and he believes Medicis has a good chance to protect the product until 2013. If generic competition starts as early as 2010, he would consider cutting his fair value estimate of the stock to $13 from $24.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV