Albany Molecular shares fall on Jefferies outlook

NEW YORK - Shares of research and development contractor Albany Molecular Research Inc. fell Friday after Jefferies & Co. downgraded the stock, citing a potential downturn in revenue as biotech companies tighten their budgets.

The stock fell $1.18, or 11.5 percent, to $9.07 in afternoon trading. Shares have traded between $8.14 and $19.49 over the last 52 weeks.

Analyst David Windley cut the rating to "Underperform" from "Hold" and lowered his price target to $8 from $10. He said the Albany, N.Y.-based company indicated that smaller biopharmaceutical companies relying on capital markets to fund operations are cutting back significantly on research and development projects.

"The problem is widespread, and Albany Molecular Research will almost certainly be negatively impacted," he said, in a note to investors.

He also said the outlook for raising new capital is dim as companies cut back on projects. Small biotech companies account for about 45 percent of the company's contract revenue, he added.

Overall, clinical research organizations have been forecasting a tighter contract market because of fiscal belt-tightening in the drug development industry. In November, Wilmington, Mass.-based Charles River Laboratories Inc. slashed is full-year guidance, as Waltham, Mass.-based Parexel International Corp. did in October. Meanwhile, Princeton, N.J.-based Covance disappointed investors during with weaker-than-expected revenue growth during the third quarter.

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