A Compelling Case for King Pharma

S&P likes the drugmaker's growth prospects and stock valuation, and gives it a strong buy ranking

We believe new management at King Pharmaceuticals (KG: $19) has done an admirable job so far in rectifying the company's past woes, defending its key franchises, and expanding the product portfolio. While King is expected to eventually face significant patent erosion on key products in the years ahead, we believe new product development projects, especially in the area of pain management, bode well for long-term growth. We also see future prospects enhanced by additional product acquisitions or in-licensing opportunities, which would be financed through ongoing strong cash flow and the company's over $900 million in cash.

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