Ahead of the Bell: Analyst downgrades Salix Pharma

Analyst lowers Salix Pharmaceuticals rating to 'hold' from 'buy,' raises price target

Associated Press

Cantor Fitzgerald raised its target price on Salix Pharmaceuticals after an 87 percent spike in shares this year, but it downgraded the company Monday on valuation.

"One of our favorite names is finally fairly valued," analyst Irina Rivkind said.

Salix shares closed Friday at $75.54, a day after reaching an all-time high of $75.87.

The company got a boost this spring when Salix and Progenics Pharmaceuticals Inc. revealed that an FDA advisory panel would review the constipation drug Relistor.

Salix wants Relistor approved for treating constipation caused by opioid pain drugs in patients with chronic pain. In 2012 the Food and Drug Administration declined to approve Relistor for that purpose.

Salix is appealing and a favorable review from the panel could improve the drug's chances.

Relistor is an injectable drug approved for use in patients with advanced illnesses who are receiving palliative care. It was first approved in the U.S. and Europe in 2010, and Salix later licensed the drug from Progenics.

Rivkind said regulators could request a safety study of the drug, and its launch could be delayed until 2016.

The company will report second-quarter results on Thursday, and Rivkind said she expects an unremarkable quarter.

Rivkind downgraded shares of Salix Pharmaceuticals Ltd., to "hold" from "buy" but raised her price target on the shares to $81 from $72. She believes there may be an additional 7 percent upside remaining.

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