Alkermes (ALKS)

We downgrade Alkermes (ALKS - Analyst Report) shares from Hold to Sell based on the financial performance in fiscal 3rd quarter of 2009 ended December 31, 2008 and the bleak outlook of the company in the next few quarters. Our price target is $8.00.

Alkermes reported fiscal 3Q09 results on Feb 5, 2009 that were less than our expectations.

We expect revenue in the 4Q09 will continue to decline by 44% to $34.7 million. Total revenue for the fiscal 2009 should decline by 18% to $197 million excluding the $120.7 million one-time revenue from Cephalon. Revenue will grow slowly during the fiscal 2010 to 2013 periods.

The company faces tough challenges in the coming quarters following a series of negative business developments, and the outlook is not rosy.