Sigma-Aldrich earnings estimate shot down by Longbow

04 February 2009 21:17  [Source: ICIS news]

NEW YORK (ICIS news)--Longbow Research downgraded US fine chemicals firm Sigma-Aldrich from “buy” to “neutral” on Wednesday, citing growth concerns stemming from the recession’s impact on the pharmaceutical and biotech sectors.

“We believe that the impact of the economic downturn is making its way into the research chemicals market, manifesting itself in lower spending by big pharma and limited capital available for emerging players, which is likely to lead to lower demand for research chemical products and lower growth for Sigma-Aldrich’s businesses,” said Longbow analyst Dmitry Silversteyn in a research note.

Demand for cell culture media, one of St. Louis, Missouri-based Sigma-Aldrich’s key markets, seems to have weakened substantially in the fourth quarter of 2008, Silversteyn said.

Growth in demand for cell culture media over the course of 2009 will probably be less than expected, perhaps in the low single-digits, he added, pointing to lower spending by big pharmaceutical companies and limited capital available for emerging players.

Silversteyn also said that media prices are under pressure.

Longbow reduced its fourth-quarter earnings per share (EPS) estimate for Sigma-Aldrich from 70 cents to 64 cents, and its full-year 2009 estimate from $3.04 to $2.75.

Investor sentiment did not accord with the Longbow analysis, however. Shares of Sigma-Aldrich jumped from $36.72 at the start of trading on Wednesday to around $38.00 in late afternoon trading.

($1 = €0.77)

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By: Clay Boswell
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