Wedbush Cuts Price Target on Dendreon (DNDN) Following Cost Restructure Plan

Wedbush is reaffirming its Underperform rating on shares of Dendreon (NASDAQ: DNDN) and its cutting its price target from $8 to $7.

The company announced new restructuring plan which includes laying off 500 workers, a majority coming from the manufacturing sector. Management indicated that the layoffs will help in their efforts to align costs with the slower than expected sales ramp for Provenge, the cuts are expected to save $120 million annually.

DNDN did highlight that reimbursement times were improving and only have an average wait time of 30 days now. The firm notes that with sales only rising by $3 million from July to August, the improvements are not doing to much.

Currently, $500 million in annual U.S. sales would result in a break even earnings.

An analyst at Wedbush comments, "we believe that the company remains pressured by both a slower sales ramp, and bottom-line problems associated with a fundamentally costly-to-manufacture product."

The firm has raised its 2011 and 2012 EPS estimates from ($2.60) and ($1.55) to ($2.54) and ($1.26). Wedbush cut its revenue estimates for the two years from $271 million and $530 million to $223.5 million and $382.6 million.

For more ratings news on Dendreon click here and for the rating history of Dendreon click here.

Shares of Dendreon closed at $10.88 yesterday.

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