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UBS Warburg Keeps 'Strong Buy' on King Pharmaceuticals


UBS Warburg reiterates its strong buy rating on King Pharmaceuticals (KG).

Analyst Steven Valiquette says he raised his sales estimates for the company's Tigan nausea drug after the FDA last week said it was illegal to sell a generic version of Tigan. For 2002, Valiquette says King should generate sales of $7 million to $9 million from Tigan. Due to the FDA action, Valiquette sees King gaining an additional $15 million to $20 million in Tigan sales going forward if it's successful in taking back all of its generic prescription share.

He raised the Tigan sales estimates to $25 million for 2003, $40 million for 2004, and $55 million for 2005 -- up from his former estimates of $7 million to $9 million for each year. Valiquette maintains his earnings per share estimates; he notes the incremental two cents to three cents in earnings per share that the company could capture from the FDA action strengthens the conviction of his $1.60 2003 earnings per share estimate.


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