Analysts Get Bullish on Biovail After Strong Q4

Biovail Corp. (BVF) is getting high marks from analysts for its better-than-expected fourth-quarter earnings. Hari Sambasivam at Merrill Lynch wrote that Biovail's strategic overhaul last year, in which it dropped its U.S. sales force and dramatically boosted its dividend, returned the company to its "core competence" of developing oral controlled-release drugs.

"BVF now features increased downside protection given the strong operating cash flow and high dividend yield," he wrote in a note to clients.

Douglas Miehm at RBC Capital Markets also praised the results, while adding that the product pipeline is key to the company's future growth. Biovail indicated that one or two new drug filings may take place this year, meaning new products could come on the market by late 2009, he wrote. Biovail is also planning to release a new formulation of the antidepressant Wellbutrin.

Mr. Sambasivam rates Biovail "neutral," while Mr. Miehm rates it an "outperform" with a price target of US$24. Biovail has traded in the $24-range all year. Thursday, the drugmaker reported Q4 earnings of 93¢ a share, ahead of the consensus analyst estimate of 77¢.

Deutsche Bank has boosted its price target for shares of Biovail Corp. to US$21 from US$16 following better-than-expected fourth-quarter earnings from the company.

The firm, which has a “hold” rating on the stock, said the strong performance was the result of higher-than-expected total revenues, an improved gross margin and a significantly lower quarterly tax rate.

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