NEW YORK (AP) -- Shares of Watson Pharmaceuticals spiked 8 percent Tuesday, after the Food and Drug Administration ended its years-long scrutiny of the drug maker's Davie, Fla., manufacturing plant, allowing products made there to be eligible for FDA approval.
At midday, shares of the Corona, Calif.-based company jumped $2.33, or 8 percent, to $31.47. The stock has traded between $23.90 and $33.91 during the past 52 weeks.
The plant, acquired when Watson bought Andrx, had been subject to a new-product hold by the FDA since 2005. The agency had taken issue with the relatively high level of product lot rejections in a few of Andrx's key products and decided to bar additional product approvals to force corrective action.
Cowen and Co. analyst Ken Cacciatore said the FDA's move sparks the possibility for approval of blood pressure drug Cardizem LA and generic heartburn drug Prilosec -- a first-to-file opportunity. In addition, diabetes drug Actos/Metformin XR, developed with Takeda Pharmaceuticals, could now be in a position to launch.
However, Cacciatore remains neutral on Watson shares, since he thinks opportunities coming out of the Fla. plant may be offset by lower sales of iron deficiency treatment Ferrlecit, due to upcoming increased competition.
JPMorgan upgraded the stock to ''Neutral'' from ''Sell,'' on the news, and Goldman Sachs' Randall Stanicky also backed a ''Neutral'' rating, saying the Fla. plant news is positive, but long-term growth prospects for Watson are modest.