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Banc of America Cuts aaiPharma to 'Neutral'


Shares of aaiPharma (AAII) plunged after the company says it has become aware of sales abnormalities in its Brethine and Darvocet product lines during the second half of 2003. This will materially affect previously announced guidance for the first quarter and 2004, and the company withdrew guidance.

Banc of America downgraded the stock to neutral from buy. Analyst David Maris says that despite his belief of compelling valuation and potential near-term positive out-licensing and balance sheet improvement, he downgrades until he has clarity on the ongoing review of inventory levels. He says he was unconvinced inventory levels were a major issue, as they were not out of sync with other Specialty Pharma companies.

However, more recently, after the company took a fourth-quarter reserve and was not able to unequivocally assert inventory levels are fine, and given internal review will be complete in the next two weeks, he believes investors should wait for results before new investments.


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