Hospira Slips After Holding Investor Meeting

From Associated Press (September 8, 2011)


NEW YORK -- Shares of drug and medical device maker Hospira Inc. fell Thursday, and an analyst downgraded the stock after the company's annual investor day.

THE SPARK: Raymond James analyst Jayson Bedford downgraded the stock to "Outperform" from "Strong Buy," his firm's top rating. He said Hospira is expecting slower profit growth because of greater spending on research and problems at an important manufacturing facility. "We viewed the (investor day) meeting as a forum to restore investor credibility. Unfortunately, we do not believe management accomplished this goal," he wrote.

Bedford wrote that the company's new CEO, Mike Ball, offered a more positive view of the company's future over the longer term, however. He said Ball focused on continued growth for Hospira based on rising sales of injectable drugs, launches of new generic drugs, improved sales in emerging markets and generic versions of biotech drugs.

THE BIG PICTURE: Hospira issued disappointing guidance in February for 2011, and in late July, it said it expects reduced profit margins because it is spending more money to improve its manufacturing process. The company has had manufacturing problems at a facility in Rocky Mount, N.C., which is responsible for about a quarter of its annual revenue.

In August, Citi Investment Research analyst Gregory Hertz upgraded the stock to "Hold" from "Sell," saying he thought Hospira shares would recover following the investor meeting.

SHARE ACTION: Hospira stock lost $2.29, or 5 percent, to $43.41 in Thursday trading. Aftermarket, the stock lost 13 cents to $43.19. Hospira shares have slipped about 13 percent since July 27, when Hospira reported its second-quarter results.

Posted: September 2011

View comments