Salix Setback Keeps It a Sell

Salix Pharmaceuticals, Ltd. (SLXP - Analyst Report) is a specialty pharmaceutical company engaged in acquiring, developing and commercializing prescription drugs used in the treatment of a variety of gastrointestinal diseases.

The company suffered a major setback in December 2007 when the FDA granted approval to three generic versions of lead product, Colazal. This is devastating news for Salix as Colazal was a significant contributor to both the top-and bottom-line. As such, we expect 2008 to be an extremely challenging year for the company with a significant decline in both revenues and earnings.

While new product launches and new indications for Xifaxan should support a recovery in revenues in 2009, we do not expect earnings to recover prior to 2010. We maintain a Sell rating with a target price of $5.

Arpita Dutt contributed to this report.

Read the full analyst report on SLXP.