Cowen analyst views Bristol-Myers unit sale as positive

NEW YORK—A Cowen and Co. analyst reiterated an "Outperform" rating on Bristol-Myers Squibb Co. Monday after the drug developer announced a $4.1 billion sale of its wound therapy and surgical care unit.

Late Friday, Bristol-Myers said it would sell ConvaTec to private equity firms Nordic Capital and Avista Capital Partners. The deal, expected to close by the third quarter, is part of the company's strategy to shift its focus to biopharmaceuticals.

Cowen analyst Steve Scala expects the company to meet the top end of its 2008 profit guidance of $1.60 to $1.70 per share.

"Whether the 2008 guidance will be revised remains unclear," he said, in a note to investors. "Overall, we view this transaction positively."

The move comes shortly after Bristol-Myers announced plans to sell between 10 percent and 20 percent of its Mead Johnson Nutritional unit. The company has already sold its medical imaging unit for $525 million.

Overall, Bristol-Myers and its peers are trying to refocus their efforts and reinvent themselves as blockbuster drugs lose patent protection and revenue falls with higher generic competition.

Bristol-Myers is still in the midst of a reorganization that includes cutting 4,300 jobs, or 10 percent of its work force, while closing more than half of its manufacturing plants.

Meanwhile, Leerink Swann & Co. analyst Seamus Fernandez reaffirmed a "Market Perform" rating for the company, predicting it will top it 2008 profit guidance.

Shares of Bristol-Myers Squibb slipped 10 cents to $23.25 in morning trading.