Hi
Tech Pharmacal Co. Inc. (HITK) 
Name: Hi
Tech Pharmacal Co. Inc. (HITK)
Web Site: http://www.hitechpharm.com
Brief Description: Hi-Tech
Pharmacal Co., Inc. engages in the manufacture and marketing of
prescription, over-the-counter, and nutritional products in liquid and
semi-solid dosage forms in the United States. It manufactures generic
and branded products, most of which are prescription items and include
oral solutions and suspensions, as well as topical creams and
ointments. The company also produces liquid ophthalmic, otic, and
inhalation products. Hi-Tech Pharmacal markets a line of branded
products primarily for people with diabetes, including Diabetic Tussin,
a sugar free cough medication; DiabetiDerm, a dermatological product;
DiabetiSweet, a sugar substitute for use in baking and cooking;
DiabetiTrim, a nutritional shake; and Multi-betic, a multivitamin and
mineral supplement. It offers liquid, cream, and ointment
pharmaceutical formulations for various disease states, including
asthma, bronchial disorders, dermatological disorders, allergies, pain,
stomach, oral care, neurological disorders, and other conditions. The
company markets approximately 100 products to chain drug stores, drug
wholesalers, managed care organizations, generic distributors, mass
merchandisers, hospitals, and mail-order pharmacies. Hi-Tech Pharmacal
was founded in 1982 and is based in Amityville, New York.
09/19/06 -
Downgraded to Neutral rating.
ANALYST OPINION: We downgrade
one of our worst performing stock picks, Hi
Tech Pharmacal Co. Inc. (HITK), to Neutral rating on worsened
operating performance as well as the risk of HITK failing
to meet its revenue guidance for the current fiscal
year.
In July 2006 Hi-Tech Pharmacal announced that it
expects FY07 revenues
to increase between 5% and 15%, a growth rate under our
estimates as well as below the grow rates reported for the last several
years.
Later, in September 2006 HITK reported a 27% yoy
drop in sales for the Q1FY07 blaming (1) lower unit sales of cough
and flu products due to a weaker than usual season compared to a
stronger than normal season in the prior year, as well as (2) pricing
pressure on several higher margin
products. Significant decrease in margins was imminent for such a drop
in sales and as a result HITK swung to losses in Q1FY07. While
company reiterated its sales guidance of 5% to 15% growth for
FY07, we believe there is a risk of HITK failing
to meet its FY07 guidance.
INVESTMENT PERFORMANCE: HITK's stock price declined by  48.8% since we had assigned a Buy
rating in November 25, 2005.
11/25/05 -
Initiated with Buy rating.
Contract:
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