Cowen maintains Sepracor's 'Outperform' rating on 1Q profit

NEW YORK—Cowen and Co. analyst Ian Sanderson reiterated an "Outperform" rating for drug developer Sepracor Inc. Thursday after the company topped Wall Street profit forecasts.

Sepracor said its first-quarter profit fell 35 percent on buyout charges, but adjusted earnings per share of 53 cents topped Wall Street expectations. Revenue fell on weaker sales of the insomnia treatment Lunesta and the respiratory drug Xopenex.

Still, Sanderson maintained an upbeat outlook on the stock.

"Sepracor shares have 20 percent to 25 percent upside relative to the market this year, despite slowing Lunesta and Xopenex trends," he wrote in a client note.

That upside will likely be driven by a settlement of the company's patent lawsuit over Xopenex, new products and the expansion of the company's development pipeline, he said. Sepracor announced a settlement with Arrow Group over Xopenex Thursday.

Meanwhile, the second and third quarters will be tougher for the company because of its heavy seasonal reliance on respiratory drugs.

Goldman Sachs analyst James Kelly, meanwhile, reaffirmed a "Neutral" rating.

Shares of Sepracor rose 41 cents to $21.96 in afternoon trading.