Morgan Stanley Raises PT on Watson Pharmaceuticals to $63 (WPI)

Morgan Stanley is out with its report today on Watson Pharmaceutical WPI, raising its price target from $61 to $63. In a note to clients, Morgan Stanley writes, "4Q results were essentially in line, and management reaffirmed 2011 guidance given at the January 21 Investor Day. We have tweaked our 2011 estimates to reflect lower SG&A growth (+9% YoY vs. previous +14%), slightly better gross margins (42% vs. prev. 41.8%) and a lower tax rate (36% vs. prev. 36.4%). We raised our 2011E from $4.00 to $4.10 which is toward the high-end of management's $3.85-4.15 and 0.7% below consensus' $4.13. We also raised 2012E by 1.5% from $5.11 to $5.19. Our $63 price target is 12x our 2012E EPS pre-Arrow payments." Morgan Stanley maintains Outperform on WPI. WPI closed Tuesday at $56.49.