We are downgrading Human Genome Sciences Inc. (HGSI) to Underperform from Neutral following the disappointing third quarter 2011 results reported by the company. The company suffered a wider-than-expected loss due to lower revenues. The most alarming factor was the below-par showing of Human Genome’s recently launched lupus drug, Benlysta.
Following the lackluster showing, we have increased our loss per share estimates for 2011 and 2012. Moreover, management has pushed back its aim of turning profitable by a year to 2014.
In view of these headwinds, we see little reason for investors to hold on to the stock at current levels. Our target price is $10.00.
