Schering-Plough shares higher on analyst report

Schering-Plough shares rose 98 cents, or more than 5 percent, to $19.92 in afternoon trading.

Sanford Bernstein analyst Tim Anderson said he is also increasing his earnings-per-share estimates from 2008 through 2010 because of prescription trends for the company's cholesterol drugs, Vytorin and Zetia, that are more favorable than the firm earlier forecast.

"Current prescription trends suggest our forecasts have been too pessimistic," he wrote.

Schering-Plough shares took a huge hit with the drug maker's release in late March of a study that showed Vytorin, a combination of a Merck's Zocor and Schering's Zetia, was no more effective at preventing cardiac plaque buildup than the much cheaper generic Zocor.

On March 31, the day the study was released at the American College of Cardiology meeting, shares plunged 31 percent. However, shares have risen 35 percent since hitting a low of $13.86 in the aftermath of the data release.

"There may be additional sources of negative news flow on cholesterol at various points throughout the year, but we continue to believe that Vytorin and Zetia will play an important role in the management of patients with hypercholesterolemia," Anderson wrote.

Anderson also cited Schering-Plough's strong pipeline and the company's low generic exposure in corroborating his position. According to Anderson, the company's first major drug patent expiration will not be until 2017.

Credit Suisse analyst Catherine J. Arnold believes that Schering-Plough shares have even more to recover with an "Outperform" rating and $32 price target.

"Cholesterol prescriptions fell fast post ACC and have been largely stable since that time, which suggests the fallout may now be entering a period of stabilization and providing investors better comfort regarding downside risk," Arnold wrote Tuesday.