NEW YORK (TheStreet) -- Cubist Pharmaceuticals (CBST) shares are down 4.3% to $96.27 in trading on Tuesday, a day after the biopharmaceutical company agreed to be purchased by Merck (MRK) for $8.4 billion. Just hours after the announcement of the deal, Cubist had four of the patents for its top selling drug revoked by a U.S. court.
Cubist shares spiked more than 30% yesterday following Merck's acquisition announcement, however the profitability of the company was called into question after a court rejected all but one of the patents covering Cubicin, the company's bacterial skin infection treatment that generated $700 million in sales during the first nine months of 2014.
The ruling allows for competitors to begin production of generic versions of the drug by 2016.
Merck released a statement saying that it still expects the company to generate at least $1 billion in revenue next year and sees growth potential in the company going forward regardless of yesterday's decision.
TheStreet Ratings team rates CUBIST PHARMACEUTICALS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CUBIST PHARMACEUTICALS INC (CBST) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, robust revenue growth, good cash flow from operations, increase in stock price during the past year and impressive record of earnings per share growth. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- You can view the full analysis from the report here: CBST Ratings Report