Mylan shares dip as the company cuts profit guidance

NEW YORK - Shares of Mylan Inc. fell Friday after the generic drug developer cut its profit guidance spanning the next several years, though Wall Street expects the company to meet the new targets.

The stock fell $1.04, or 8.4 percent, to $11.42. Shares have traded between $10.04 and $22.90 over the last 52 weeks.

The company cut its 2008 adjusted profit guidance to between 40 and 50 cents per share, from 70 to 90 cents per share.

Analysts polled by Thomson Financial expect profit of 53 cents per share.

Mylan also cut guidance for 2009 and 2010 after reporting a wider first-quarter loss because of an impairment charge, though adjusted profit topped Wall Street forecasts.

Wachovia Capital Markets analyst Michael Tong said the guidance cut was expected, with the company citing underperformance at its Dey specialty unit and higher operating expenses. He said the new guidance indicates that cost savings from acquiring Merck KGaA's generic unit may be smaller than expected and take longer to realize.

The company bought that generic unit in October. Also, Mylan is looking to divest Dey.

"While investors had expected Mylan to lower its three-year earnings per share outlook, the magnitude was larger than we had anticipated," Tong wrote in a note to investors.

Still, management set a relatively low bar for near-term earnings expectations, he added, and will likely not miss its target. He reaffirmed a "Market Perform" rating.

Meanwhile, Goldman Sachs analyst Randall Stanicky reaffirmed a "Buy" rating, saying the new forecasts seem achievable. Also, the new guidance excludes Dey, eliminating any overhang on earnings from a future sale. He also lowered his 12-month price target to $17 from $18.

Looking ahead, Cowen and Co. analyst Ken Cacciatore said investors will likely track several upcoming opportunities, including the potential patent dispute settlement or launch of the company's version of the bipolar disorder and migraine drug Depakote. Other opportunities include the possible launch of generic Paxil, a depression treatment, and generic Keppra, an epilepsy drug.

Cacciatore reaffirmed an "Outperform" rating.

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