BARR PHARMACEUTICALS (BRL)
Down 23% to $38.10
Merrill cuts to neutral from buy
Analyst Gregg Gilbert says revenues of $603 million were 10% below his estimate and EPS of 57 cents fell short of his 69 cents view. While weakness for generic oral contraceptives (OCs) was expected to some extent, he was surprised by the magnitude of the miss for high margin generic OC's ($93 million vs. his $110 million) as well as the rest of the base generic biz ($168 million vs. his $204 million) and the branded biz ($96 million vs. his $125 million). Based on surprisingly soft Q1 and 2008 outlook, which now includes the mid-year launch of generic Yasmin, Gilbert lowered his rating to neutral. He notes he's still excited by potential for sales/EPS growth acceleration in 2009 driven by new generic launches, but the '08 base is likely to be much lower than he'd hoped.
WARNER MUSIC GROUP (WMG)
Down 1.8% to $8.89
Goldman puts estimates, target under review
Analyst Ingrid Chung says Warner’s as-expected Q2 top line results were solid. However, while the overall music industry has experienced a recent stabilization in 2008 trends, she still expects industry fundamentals will continue to be weak, with market share gains even tougher to achieve as Warner cycles through tough comps in 2008. Chung says that without an indication of what cash freed up from suspension of dividend will be used for, she continues to advise investors to stay on the sidelines as there is limited visibility into timing, magnitude of returns from $400 million cumulatively invested in new labels and $360 million in music initiatives. Her estimates and price target are under review. She rates the stock neutral.
F5 NETWORKS. (FFIV)
Up 5.7% to $27.42
RBC Capital upgrades to outperform from sector perform
Analyst Mark Sue says it's been several quarters of in-line results but new products may provide F5 with a much-needed tailwind to return to above-market revenue growth. He notes that with indications of strong pent-up demand for F5's new Viprion modular switch, and its new low -nd series, his calendar 2008 EPS estimate rises to $1.50 vs. the $1.46 Wall Street consensus; he maintains his $1.81 Street-high calendat 2009 estimate. Sue says F5's high-end Viprion, initially targeted for service providers, is enjoying a strong response from dot.com customers and large enterprises. Sue notes F5 is working on a rolling refresh of its Big IP family; entry level products are in beta with revenues expected in Q4 fiscal 2008 (Sept.). He raised his $25 price target to $32.