UPDATE: Piper Jaffray Color On WPI Target Increase

Piper Jaffray, which raised its PT on shares of Watson Pharmaceuticals Inc. WPI, is providing some color on the stock. “Watson's 1Q11 results were solid, with generics continuing to outperform, particularly on gross margins, coming in at 52% (versus 47% in 1Q10),” Piper Jaffray writes. “With U.S. pricing relatively stable and limited exposure to the U.K., France and Germany, where pricing pressure continues, we believe these margins are sustainable. “With sustained exclusivity for generic Concerta, contribution from Prochieve, and potential upside from other opportunities (such as generic Lidoderm), we believe WPI has strong visibility on EPS easily exceeding $6 per share by 2013. With a long-term EPS CAGR at least in the low-to-mid-teens, and a P/E of only 10x our new 2012 EPS estimate of $5.69 (the Street is only at $5.15), we believe there is potential for considerable further value creation.” Watson Pharmaceuticals closed Wednesday at $61.73.