Cephalon Downgraded On Challenges To Profits

NEW YORK (AP) — An analyst downgraded shares of Cephalon Inc. Wednesday, saying he does not expect the stock to gain value and Cephalon may have difficulty reaching expectations.

Thomas Russo, an analyst for Robert W. Baird and Co., lowered his rating to "neutral" from "outperform." He also cut his 2009 and 2010 profit estimates for the company, and said strong sales of Cephalon's sleep aid Nuvigil have failed to boost the company's stock price.

He pared his price target to $59 per share from $74. Cephalon shares fell $1.81, or 3.2 percent, to $54.28 in afternoon trading, and have ranged between $52.55 and $81.35 over the last 12 months.

Cephalon is forecasting a profit of $457 million to $464 million this year, with $2.18 billion to $2.23 billion in revenue. Russo said sales of the company's chemotherapy drug Treanda and its muscle relaxer Amrix have been disappointing, which will make it harder for the company to keep its sales growing.

The analyst said he believes Cephalon may have to cut spending to reach its guidance. He slashed his 2009 profit estimate to $5.66 per share from $5.84, and now expects a profit of $5.87 per share in 2010, down from $6.31. Thomson Reuters says analysts expect $5.74 per share this year, on average, and $6.39 per share next year.