Banc of America downgraded King Pharmaceuticals (KG) to neutral.
Analyst David Maris says the third quarter was better than he expected, but he downgraded due to lower guidance. For 2004, he notes the company is guiding to $1.50 to $1.60, well below estimates. Despite the success of recently acquired products, and the impressive 9% free cash flow, Maris says these two primary growth drivers have fallen short recently, and trends have not shown signs of reversing.
Given the price increases on leading products, he thinks Kimg's revenue shortfall is surprising. Although certain aspects of the King story are more attractive for long-term investors, the recent change in his near-term outlook is concerning.