Wednesday, July 21, 2010

Dramatically Bullish Guidance from Cephalon

Prior to the opening Cephalon (CEPH) dramatically and surprisingly upped guidance by some 30%. CEPH didn't provide any details for the smashing results or provide full year guidance. The lack of details regarding the durability of these results is likely holding the stock down to minimal gains today.

Regardless of the details, CEPH already traded at a forward PE of just over 8 so any news on beating estimates should send this stock soaring. The market continues to discredit positive news. Great opportunity to buy on the cheap.


  • The company now anticipates that sales for the second quarter 2010 will be between $705-715 million, up from the previous sales guidance of $645-670 million
  • resulting in basic adjusted income per common share for the second quarter 2010 of between $2.17-2.22, up from the previous guidance of $1.65-1.75.
  • Due to the company's expectations regarding second quarter 2010 financial results, the company is suspending its previously issued full-year 2010 financial guidance.

Some analyst notes from Reuters:

  • JPMorgan analyst Chris Schott, in a research note, said the increased sales forecast was likely due to strong sales of the cancer drug Treanda and steep price increases for Provigil, the older of the two sleep disorder drugs and long Cephalon's flagship product.

    "The company's EPS target for the quarter is well above our estimates, suggesting lower-than-expected expense trend in the quarter as well," Schott said.

    "We expected a (earnings) beat, but not one this strong," said Robert W Baird analyst Thomas Russo in a note, also pinning the new forecast on Treanda sales, Provigil price increases and lower spending.

    Treanda prescriptions have picked up since positive data on the drug for non-Hodgkin's lymphoma was presented late last year.


Any significant revenue from Treanda would be a huge plus to this stock. The 27th should be interesting. Not that it'll matter in this market.

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