Earnings Preview: Forest Laboratories

Forest Laboratories (FRX) is expected to report Q1 earnings before market open Tuesday, with a conference call scheduled for 10:00 am ET.

Guidance

Analysts are looking for a profit of 80c on revenue of $978.86M. The consensus is 72c to 87c for EPS, and revenue of $931.58M to $1.01B, according to First Call. The company reported Q4 EPS 90c vs. consensus of 76c and Q4 revenue $990.85M vs. consensus of $977.14M.

Analyst Views

At that time, the company reported that sales of Lexapro, an SSRI indicated for the initial and maintenance treatment of major depressive disorder and generalized anxiety disorder in adults, increased 9% in the quarter to $577M from $530M in the year-ago quarter. Sales of Namenda, an NMDA receptor antagonist for the treatment of moderate and severe Alzheimer's disease, totaled $226M in the quarter, an increase of 26% from sales of $180M in last year's fourth quarter. Positive influences for this quarter are higher sales of Lexapro after an FDA clearance for the treatment of adolescent depression and higher Namenda sales due to greater acceptance in the medical community. Risks to earnings for Forest Labs are an increase in competition for Lexapro and other core products.

On May 22, Jefferies noted that the sell-off in shares may reverse in the second half of 2008 as data from a couple of Phase 3 programs are published and FDA rules on the milnacipran NDA. Based on the current information, Jefferies has a positive bias on aclidinium and milnacipran and maintains a Buy rating on the stock.