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Cubist Pharmaceuticals Inc. (CBST - Analyst Report) is all set to report its third quarter 2012 results on October 18, 2012. The Zacks Consensus Estimate for the third quarter is 45 cents, representing a year-over-year increase of 35.26%.

Second quarter 2012 recap

Cubist Pharma’s second quarter 2012 earnings (excluding special items but including stock-based compensation expense) came in at 68 cents per share, up 28.3% from the year-ago period.

Reported earnings came in at 58 cents compared with a loss of 34 cents in the year-ago quarter. The earnings results comfortably surpassed the Zacks Consensus Estimate of 48 cents. Results in the quarter were primarily driven by strong sales of antibiotic injection, Cubicin (daptomycin) in the US.

Revenue in the second quarter of 2012 climbed 30.0% to $230.6 million, beating the Zacks Consensus Estimate of $226.0 million.

Agreement of Estimate Revisions

Over the past seven days, most analysts covering Cubist Pharma have left their earnings estimates for the third quarter 2012 unchanged. The last seven days has seen only one analyst revising the earnings estimate for the third quarter of 2012. The movement has been in the upward direction. Similarly, the fiscal 2012 earnings estimate has been revised upwards by one analyst over the last seven days.

We believe that most analysts have preferred to adopt a wait-and-watch approach until Cubist Pharma unfurls its results on October 18 before revising their estimates. We expect Cubist Pharma’s results in the third quarter of 2012 to be driven by strong sales of Cubicin. We are also pleased by the company’s agreement with Optimer Pharmaceuticals Inc. to co-promote Dificid in the US for C. difficile acquired diarrhea.

Magnitude of Estimate Revisions

Given the lack of significant directional pressure, earnings estimates for the third quarter and fiscal 2012 have gone up by a penny and 2 cents to 45 cents and $1.86 per share, respectively, over the last seven days.

Our Recommendation

Currently, we have a Neutral recommendation on Cubist Pharma. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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