Zacks Investment Research downgraded shares of Salix Pharmaceuticals, Ltd (SLXP) from OUTPERFORM to NEUTRAL on August 16, 2012, with a target price of $48.00.
Salix posted second quarter earnings of $0.79 per share, well above the Zacks Consensus Estimate of $0.47 and the year-ago earnings of $0.54. Second quarter revenues increased 35.9% to $181 million, just shy of the Zacks Consensus Estimate of $182 million. Xifaxan continues to perform well and should keep driving growth. We believe Salix will continue seeking suitable in-licensing opportunities in order to grow revenues. While pleased with the company's second quarter performance, we were disappointed to see the FDA issue a CRL for Salix' sNDA for Relistor. We currently have low visibility on the FDA's requirements for this candidate and prefer to remain in the sidelines until the company's meeting with the FDA regarding the CRL. We are moving back to a Neutral recommendation on the stock, which carries a Zacks #3 Rank (short-term Hold' rating).
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