Citigroup Ups Endo Pharmaceuticals to Buy

Analyst Andrew Swanson says the opportunity for generic painkiller OxyContin could become larger and more sustainable than initially thought

Citigroup upgraded Endo Pharmaceuticals (ENDP ) to buy from neutral.

Analyst Andrew Swanson says the Endo Pharmaceuticals upgrade reflects his view that opportunity for generic painkiller OxyContin could become larger and more sustainable than initially thought. He says prescription share gains have been rapid, while price erosion seems to have been rational to date.

Longer-term, he believes the OxyContin opportunity will provide Endo with the cash required to diversify its business away from Lidoderm through either product licensing or even mergers and acquisitions.

Swanson raised his earnings per share estimates from $1.57 for 2005 to $1.68, and from $1.71 for 2006 to $1.79. He boosted his $27 price target to $31.

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