Wednesday, February 01, 2006

Sepracor Upgraded; Take Two Downgraded

Just a day after our bullish report on Sepracor (SEPR), the stock was upgraded today by Stanford Research. Here was our take yesterday:
Sepracor (SEPR), maker of insomnia drug Lunesta, steamrolled through earnings yesterday. 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.
And just a couple of days after our bearish report on gamer Take Two (TTWO) , the stock gets downgraded today by Piper Jaffray. Over the weekend, we wrote:

....we’re reiterating our sell recommendation, as well as lowering our price target to $8....Potentially cannibalized/sluggish sales, further management erosion, and a staid gaming environment all spell one thing for Take Two: a mess bloodier than its games.

Tonight, we'll be upgrading research provider Factset (FDS), so stick around.

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