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Cephalon Shares Fall on Guidance

Second-quarter expectations come in below estimates.
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Updated from 8:51 a.m. EDT

Despite posting a sharply higher first-quarter profit late Monday,



shares dropped Tuesday after the company said it expects second-quarter results below analysts' estimates.

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Cephalon said first-quarter net income rose to $21.7 million, or 37 cents per share, from $12.2 million, or 21 cents a share, a year earlier. Excluding all charges and items, the company said it earned 33 cents a share, beating the 30-cent-a-share Wall Street estimate and the 28-cent guidance the company had given previously.

Revenue came in at $215 million, up from $144.7 million a year ago. Strong sales of the company's three key products drove the nearly 50% increase in revenue. Sales of Provigil, a narcolepsy treatment, rose 69%, while sales of Actiq, a painkiller, rose 52%. Sales of Gabitril, an epilepsy fighter, rose 79%.

Investors were disappointed with the company's future guidance, sending shares down 76 cents, or 1.3%, to $56.05.

Cephalon established a new second-quarter EPS estimate of 38 cents a share, which is below the current 42-cent estimate. The company said second-quarter sales would come in between $220 million and $230 million, which is also below the current analyst estimate of $230.8 million.

The company reiterated its previous 2004 EPS estimate of $2, matching current Wall Street expectations, while reiterating sales guidance between $900 million and $950 million, which is slightly below the current Wall Street estimate of $957.9 million.

The company noted that "consistent with prior years, the company expects continued sales growth to yield greater earnings per share as 2004 progresses."