Forest Labs stock may rise on strong drug pipeline: Barron's

NEW YORK (Reuters) - Shares of Forest Laboratories Inc (FRX.N) could climb between 20 percent and 40 percent in the next year due a strong pipeline of drugs poised to hit the market by 2012, Barron's said in its February 11 edition.

It "generates in excess of $1 billion in free cash flow annually, and already (has) a sizable cash position for acquisitions and licensing deals," Broadpoint Capital analyst David Lickrish told Barron's.

Last month, the company raised its fiscal-year earnings forecast and posted a surprising 21 percent jump in quarterly profit, boosted by strong sales of its drugs for depression and Alzheimer's disease.

Forest's shares, which closed at $40.25 on Friday, are trading off nearly 29 percent from a 52-week high of $56.65 reached May 23.

"Wall Street will realize that the stock fell too much," Scott Richter, a portfolio manager with Fifth Third Asset Management, told Barron's. "Another 20 percent gain is not unreasonable."

Barron's also cautioned that Forest's stock could fall sharply if generic versions of Lexapro or Namenda come out early and new products are delayed.

Nevertheless, the company's strong reputation as a marketing force gives Forest an edge, Barron's said.

(Reporting by Justin Grant, editing by Maureen Bavdek)