I read their report, and I think they have fair estimates of Antegren. Specifically, they are assuming that Antegren gets incremental revenues from success from RA and Chron's, whereas a more conservative estimate would include only MS revenues, since MS is the only one really approved to date.
When you look at the way they arrive at their current estimates, they are taking their 2008 eps estimate of $1.39, multiplying it by a P/E of 35, and discounting by 20% for 3 years to get to a current year estimate.
If you back those numbers out, these are the prices they are predicting: 2005 - $28 (8% upside from now) 2006 - $33 (27% gain from now) 2007 - $40 (54% gain) 2008 - $48 (85% gain)
That doesn't seem too gloomy to me: an 85% gain over 3 years exceeds my own projections for ELN and also marks a substantially better return than what I would guess the average equity would return.
If you take their same assumptions, but change the discount rate to 12%, which is the long term expectation of what normal equities will return, you get a picture like this:
2005 - $35 2006 - $38 2007 - $43 2008 - $48
which would imply a 35% gain over next year, again, nothing I would complain about.
So ... I'm not sure that the DB report is really as pessimistic as the headline news makes it out to be.
My opinion: All that you say is fine. I have no problem. My question is this - What has changed since DB's target was $31. SEC/CA settlements have been announced. FDA has approved antegren. We have antegren data that we didn't have. The price for antegren is higher than they then or now think it is. So in light of a very positive news flow that has come to fruition as expected or better, DB lowers their target from 31 to 28. THAT'S THE POINT. How did they get to 31 then, with all the above risks factored in, and how does that compare to how they get to 28 now, when all those risks have been favorably resolved. Their explanations left many saying "Huh?"!!!