ANALIZĂ ERSTE BANK:  The exports of Antibiotice Iasi to the US increase its attractiveness

• Analysts have a target of 0.626 lei/share

US exports and the postponement of the implementation of the claw-back system caused Erste Bank analysts to revise their recommendation for the shares of drug maker "Antibiotice Iaşi" from "sell" to "hold", after the company began exporting to the US in mid June.

Therefore, the new estimate for "Antibiotice" indicate a target price of 0.626 lei/unit, slightly higher than the previous target of 0.624 lei.

Raluca Ungureanu, an analyst with the research department of BCR, part of the Erste Bank group, said: "We have improved our recommendation, from "sell" to "keep", in order to reflect the better sentiment concerning this company".

The target price indicated by Erste Bank is approximately 6% higher than yesterday"s price for the stock of "Antibiotice".

The shares of the drug manufacturer did not do so good since the beginning of the year, losing 7%.

Earlier this month, the company began exporting injectable drugs to the US, concluding a contract worth USD 4 million/year, for a period of 5 years.

"Increasing exports is a strategic objective for the company, especially considering the worsening of the economic situation of the domestic market. For the 2010-2014 period, we expect the company to increase its sales at an annual rate of 9%", said Raluca Ungureanu.

Analysts estimate that the turnover of "Antibiotice" Iaşi will amount to 245.8 million lei in 2010, an improvement over the initial estimate of 242 million lei.

Also, Erste Bank expects the drug maker to post a net profit of 15.9 million lei, up 7% over the previous estimates, even though the claw-back fee, which provides that drug companies will be required to pay a quota of their quarterly earnings, was postponed.

"In our opinion, this taxation system could be postponed until the beginning of 2011", the analysts of the Austrian bank concluded.

The claw-back system provides that all drug manufacturers which sell on the domestic market would need to pay from 5% to 11% of their sales to the public healthcare system.