On Thursday, Wells Fargo upgraded Watson Pharmaceuticals to outperform from market perform and boosted its projected share price range to between $84 and $90 (previously $75-$79) on higher confidence in the benefits of its $5.6 billion acquisition of Actavis from late April. Watson Pharmaceuticals rose at the end of April when management announced a cheaper than expected acquisition that was projected to wrench out higher than expected cost synergies and earnings gains. When the deal is completed, Watson Pharmaceuticals expects to tilt 40% of its generic drugs revenue outside of the U.S. Those benefits and synergies are expected to add 30% to Watson's non-GAAP 2013 earnings per share, causing analysts like Credit Suisse's Mike Faerm and Corey Davis of Jefferies to boost their share expectations for Watson Pharmaceuticals, as it takes on larger generics competitors Mylan ( MYP), Sandoz and Teva Pharmaceutical ( TEVA). But after an over 5% share surge to over $74 in reaction to the deal, Wells Fargo analyst Michael Tong was reluctant to raise his outlook on Watson Pharmaceuticals until a further check on the combined company's earnings targets and integration benefits. That's changed with Thursday's upgrade, which pushed Watson Pharmaceuticals shares up nearly 3% to $72.77 in afternoon trading. "The higher confidence, coupled with recent share price pullback, has turned the potential reward/risk profile of Watson Pharmaceuticals significantly more favorable, in our view," wrote Tong in a note to clients. Tong adds that the combined company could generate $7.68 in 2013 earnings per share, up from a forecast of $7.17, assuming a $1 billion debt paydown and deal-related expense reductions and profit margin increases. Still, integration risks and the European economy represent key risks for investors, cautions Tong.