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Prudential Cuts MGI Pharma to Neutral


From Standard & Poor's Equity Research

Prudential downgraded MGI Pharma (MOGN) to neutral, noting troubles with the company's medical treatment Aloxi.

Analyst Jason Zhang says his sales tracking service indicated sales of Aloxi, the company's treatment for nausea in chemotherapy patients, would be robust, but they came in below his and consensus estimates. He says the company cut its Aloxi $285 million to $300 million 2006 sales guidance to $250 million to $270 million, citing the earlier-than-expected introduction of an authorized version of generic Zofran to the market. He views reduced guidance for Aloxi sales as a setback for MGI Pharma, and believes it brings into question Aloxi's sales potential going forward. He slashes his 11 cents 2006 earnings per share (EPS) estimate to a 56 cents loss, and moves his $30 stock price target to $19.


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