Lehman Brothers Upgrades Pharmaceuticals
Lehman Brothers upgraded the major U.S. pharmaceuticals group to positive from negative, driving shares of Merck (MRK ) and others higher Tuesday. Analyst Anthony Butler says the upgrade is predicated on multitude of basic premises: increased visibility on 2003 EPS on a company-by-company basis; upward inflection in forward EPS momentum for the group; potential plethora of positive news flow on new drug approvals and filings in the fourth quarter; and valuation trough. He projects 8% weighted average EPS declines for the third quarter (-4% excluding Bristol-Myers Squibb (BMY ). But he says the third quarter may signal a turning point for this much-maligned group. While BMY may continue to lag group, he expects Merck, Eli Lilly (LLY ), Pfizer (PFE ), Schering-Plough (SGP ), and Wyeth (WYE ) to post positive year-over-year gains in the fourth quarter.