Wachovia Cuts EPS Estimates on ICN Pharma

Analyst Michael Tong suspects issues bigger than royalty problems at the drugmaker may be cause of its shortfall

Wachovia Securities cuts its estimates on ICN Pharmaceuticals (ICN ) after the company said it sees Q3 EPS from operations of $0.08 to $0.13.

Analyst Michael Tong says he is surprised by the magnitude that the generic drug maker has lowered guidance. He believes the company's other operations (excluding North American) will probably experience weaknesses soon. The sheer magnitude of the shortfall suggests more problems than just royalty problems. Tong says if there is a pickup in Q4 royalty revenues it will only be modest.

Tong cut his Q3 EPS estimate to $0.10, down from $0.32 and lowered 2001 EPS to $0.93, from $1.15. He sees 2002 EPS estimate of $1.71. The stock outperformance is unlikely until observable operating improvements emerge. He rates the stock a market perform.

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