Citigroup reiterates Forest Labs at buy

Forest Labs was reiterated by Citigroup Investment Research analyst Andrew Swanson at a buy rating and $53 price target after Mylan and Forest announced that Forest has in-licensed the rights to nebivolol in exchange for a $75 million milestone and a royalty stream. The rating was based in part on Merrill's assumption that Forest buys nebivolol at cost from Mylan, pays a 25% royalty on sales, uses its existing sales force capacity and adds $20 million per year in development expense. Citigroup lowered its fiscal 2007 forecast to $2.87 from $2.91 and its fiscal 2008 forecast to $3.27 from $3.30, but increased its fiscal 2009 forecast to $3.93 from $3.72. Shares of the New York City pharmaceutical company were up $2.74, or 6.82%, at $42.89 on volume of 7,105,100 shares versus the three-month running average of 1,716,520 shares. (NYSE: FRX)

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