Tuesday, January 31, 2006

Sleeping Soundly: Sepracor

Sepracor (SEPR), maker of insomnia drug Lunesta, steamrolled through earnings today.

Sepracor posted 4Q earnings of $37.2 million, or 32 cents per share -- that reversed a loss of $33.7 million a year ago.

Revenue popped to $311.1 million from $131.4 million last year.

Lunesta, a 1B drug, is a proven leader and is winning the war against rival drugs Sonesta and Ambien, remarkable considering that Sepracor's sleep aid has only been on the market for 13 months.

It befuddles us as to how Sepracor hasn't been acquired yet -- it will -- it's just a question when.

When Sepracor gets swallowed, we don't see the company going for anything less than $72.

Sepracor's other star drug is asthma treatment Xopenex, whose growth prospects remain solid.

Sepracor provides an attractive opportunity for its market expansion potential, newfound earnings leverage, and robust pipeline.

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