Oppenheimer Maintains Perform on American Oriental Bioengineering

Oppenheimer is out with its report today on American Oriental Bioengineering

, maintaining Perform. In its report, Oppenheimer writes, "AOB's 2Q11 revenue declined by 30% yoy, as the company shifted product mix to high-margin products in face of headwinds from drug price cut and high TCM raw material cost. Gross margin dropped 41bps qoq and 400 bps yoy. EPS of $0.05 missed our estimate of $0.07 even though operating expenses are lower than we expected. AOB acquired a TCM raw material trading center in northern China for ~$30M, hoping to get better control of raw material cost. We expect revenue to decline in 2011, given uncertainties in China's pharmaceutical industry. We maintain our Perform rating." At the time of posting, shares of AOB were trading at $0.99, even with Thursday's close.