Amgen safety concerns begin to take toll on customers: DaVita shares fall after warning.RECENT safety concerns about the popular anemia drugs Epogen and Aranesp have mainly focused on the potential impact on its maker, Amgen Inc., should physicians start prescribing the drug for fewer conditions and in smaller dosages. Now some of the drugs' largest customers are starting to feel the blow-black. Consider El Segundo-based dialysis service provider DaVita Inc. While most of the safety concerns have been over off-label usage of the drug to treat cancer-related anemia, DaVita Inc. saw its shares fall more than 3 percent on March 12 after it warned that newly mandated safety precautions on the labels of the popular anemia drugs could crimp crimp a regular wave formation of small dimensions, e.g. the crimp of wool fibers epitomized in the Merino breed and its derivatives. crimp marks marks made by wrinkling the x-ray film while holding it between the fingers. earnings. The drug is also used to treat dialysis related anemia. DaVita last month reported that 2006 net income rose 26.7 percent to $289.7 million, or $2.74 per share, with revenue up 64 percent to $4.88 billion. By one analyst's estimate, 38 percent of DaVita's operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. last year as defined by EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. ) was generated by administering Epogen to managed care patients. Gary Lieberman, an analyst for Stanford Group Co., who has a hold recommendation on shares, said the company's earnings growth is vulnerable to both reimbursement cuts by Medicare and other payers, but also to decreased usage by physicians worried about the drug's safety. Even Amgen is admitting the possibility. "We expect some physicians to change their prescribing patters in response to this labeling change, although we have no ability to predict the extent of those changes," DaVita said in a statement. But other analysts believe the sell-off presents opportunities for DaVita investors. Mark Arnold Mark Arnold (born July 7, 1966) is an American punk rock singer and guitarist, best known for two band projects Big Drill Car (1987-1995) and All Systems Go! (post-1995). at Piper Jaffray Piper Jaffray & Co. (NYSE: PJC), often shortened to just Piper Jaffray or PiperJaffray, is a U.S. middle-market investment banking firm based in Minneapolis, Minnesota and is a focused on delivering financial advice, investment products and transaction execution & Co. last week raised his stock recommendation from sector-perform to outperform with a $59 a share price target. He believes the stock, which closed at $52.12 on March 14, is undervalued Undervalued A stock or other security that is trading below its true value. Notes: The difficulty is knowing what the "true" value actually is. Analysts will usually recommend an undervalued stock with a strong buy rating. given the growth prospects from its 2005 acquisition of Gambro Healthcare dialysis centers. Lieberman has a $56.88 price target on shares. |
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