Par: Out Of The Rough?

By Gene G. Marcial

Since posting disappointing earnings in April, Par Pharmaceutical (PRX ), No. 6 in U.S. generic drugs, has seen its shares plummet -- from 61 to 34. Delayed launches of three drugs and a few price drops have crimped earnings. But some pros see an upturn. "Significant earnings drivers are on tap," says David Buck of Buckingham Research Group, who pegs Par a strong buy, with a 12-month target of 63.

He expects Par to get approval in mid-2005 of its generic version of Ultracet, an acute-pain treatment (with U.S. sales of $300 million, now marketed by Johnson & Johnson (JNJ )). Par is being sued by Ultracet's maker, Ortho-McNeil, claiming it infringed on its patent, which Par denies. A decision is expected in mid-2005. Adam Greene of First Albany Capital (FACT ) says an Ultracet generic would add 70 cents a share to earnings -- but even without it, he calls Par "attractive." It has an "impressive pipeline" with 40 generic drugs awaiting Food & Drug Administration O.K. Par now makes 80 prescription generic drugs.

An Abrupt Tumble
Greene, who tags the stock a strong buy, says Par has signed pacts with biggies to produce generics of their drugs -- with sales of more than $1 billion. The generic versions, he figures, could get approval in 2005. Greene estimates 2004 earnings of $2.51 a share, and $3.04 in 2005 -- still below 2003's $3.60.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

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