King Pharmaceuticals (KG) reported second quarter results of 32 cents per share, beating the Zacks Consensus Estimate of 38 cents. Although revenues increased 12% from the year-ago period, we remain concerned about the declining prescription trends of most of the company’s key products.

Moreover, King faced several regulatory setbacks and has yet to gain approval for its key pipeline candidate, Embeda. The delay in Embeda’s approval has been frustrating and we expect investor focus to remain on this event.

While King is optimistic about gaining approval for Embeda later this year, non-approval would be a major blow. Pipeline setbacks, increasing competition, generic threats and declining prescription trends are likely to weigh on the stock. We have an Underperform rating on the shares.Zacks Investment Research