On Aug 19, we maintained our Neutral recommendation on
Cubist Pharmaceuticals Inc.
). We are encouraged by the impressive performance of Cubist
Pharma in the second quarter of 2013. Our investment thesis is
supported by a Zacks Rank #3 (Hold).
Why the Reiteration?
On Jul 18, Cubist Pharma reported higher-than-expected
revenues in the second quarter of 2013. Revenues climbed 12.2% to
$258.8 million driven by strong sales of Cubicin, an antibiotic
injection. Net product sales in the U.S. climbed 14.1% to $239.5
million. Most of the U.S. sales came from Cubicin. Net sales of
the product in the U.S. climbed 13.4% to $227.1 million in the
second quarter of 2013.
Cubicin performed well in the international markets as well
with sales of the drug climbing 31.6% to $15 million. The strong
sales of Cubicin in the second quarter of 2013 have pleased us
following a disappointing first quarter. We are pleased by the
strong sales of Cubicin in the second quarter after the
disappointing first quarter performance.
At the second quarter 2013 conference call, the company stated
that it was well on track to achieve revenues in excess of $1
billion in 2013, well over 2012 levels. Revenue growth is
expected to be driven by strong Cubicin sales. Cubicin sales for
2013 are projected in the range of $900-$925 million, up 11%-14%
year over year. We too expect Cubicin to continue performing
well, thereby driving growth at Cubist Pharma. At its investor
day, in Jun 2012, the company stated that it expects global
revenue to grow to $2 billion by 2017.
We are also encouraged by Cubist Pharma's decision to acquire
) and Trius Therapeutics. The acquisitions, on completion by year
end, should strengthen Cubist Pharma's antibiotics portfolio.
We prefer to remain on the sidelines until the acquisitions
materialize. We retain our Neutral recommendation on the
Stocks that Warrant a Look
While we expect Cubist Pharma to perform in line with its
peers and industry levels in the coming months and advice
investors to wait for a better entry point before accumulating
shares, one can look at
Alexion Pharmaceuticals, Inc.
) as a good buying opportunity. This biopharmaceutical company -
sporting a Zacks Rank #2 (Buy) - has performed encouragingly over
the last few quarters with potential to rise significantly from
Gilead Sciences Inc.
) is another company that is favorably placed in the biopharma
space with a Zacks Rank #1 (Strong Buy).
ALEXION PHARMA (ALXN): Free Stock Analysis
CUBIST PHARM (CBST): Free Stock Analysis
GILEAD SCIENCES (GILD): Free Stock Analysis
OPTIMER PHARMAC (OPTR): Free Stock Analysis
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