A Big Upgrade for Forest Labs

by Dave Mock - April 16, 2009 - 0 comments

Every day, the sun rises on Wall Street, and a plethora of professional analysts wake to issue new opinions on stocks. Here at the Fool, we use our "This Just In" column to examine some of these picks-- and the track records of the firm behind them -- so individuals can make better investing decisions.

In addition to following professional banks, anyone can use Motley Fool CAPS
to monitor the collective opinions of more than 130,000 members, many
of whom demonstrate better investing insight than published analysts do.

Enough top-performing CAPS members have recently turned bullish on Forest Labs (NYSE: FRX) to upgrade it from its long-held four-star rank to the highest possible five stars.
A total of 449 members have given their opinion on Forest Labs, with
many offering analysis and commentary to explain their recent optimism.

Forest Labs has already picked up a couple of FDA approvals so far this year. With partner Cypress Bioscience , it had the fibromyalgia drug Savella approved in January, to compete with Pfizer 's (NYSE: PFE) Lyrica and Eli Lilly 's (NYSE: LLY) Cymbalta. Also, its depression treatment Lexapro -- a rival for Pfizer's Zoloft and GlaxoSmithKline's
(NYSE: GSK) Paxil -- was recently approved for adolescents, only the
second drug to earn that distinction. (Eli Lilly's Prozac is the other
one.) Lexapro is already marketed to adults, with annual sales of more
than $2 billion.

Like sanofi-aventis (NYSE: SNY) and Bristol-Myers Squibb (NYSE: BMY), Forest faces patent expirations on Lexapro and Namenda in a few years, which could bring generic competition. Companies such as Teva Pharmaceuticals (Nasdaq: TEVA) have already taken a legal shot
at Lexapro. Forest is counting on Savella and other new drugs to help
replace that revenue, and its management sees potential in the
drugmaker's late-stage pipeline. It also has plenty of resources to
help stave off an impending revenue drop, with more than $2 billion in
cash and short-term investments and no debt at the end of 2008. And
with solid free cash flow continually adding to the pile, many
investors see plenty of options available for the drugmaker.

To see what the very best CAPS analysts are saying now about Forest Labs -- and what other winning stocks they're picking -- head on over to CAPS
and have a look. Unlike analysts' opinions, which are usually reserved
only for paying clients, the community research and resources in CAPS
are totally free.

More Foolishness:

second or third choice isn't so bad.Dendreon has taken investors on a wild ride.Health care hasn't exactly proven immune to the current market.

Last edited by harsheeb on Thu, 04/16/2009 - 09:36 | Write to author: Dave Mock |