Normally, investors hate it when a company can't pin down its sales guidance for the year. But I don't think anybody will complain about Cephalon's (NASDAQ:CEPH) inability to keep its guidance -- after all, it just upped its 2006 revenue forecast for the fourth time this year.

The biopharmaceutical company increased its revenue estimate to a little over $1.5 billion for the year, after a strong third quarter showed a 56% year-over-year increase in revenues to $482 million. Revenue growth has been driven by all of Cephalon's major products but Provigil, a treatment for excessive daytime sleepiness, which provides nearly half of sales:

Provigil Sales*

Y-O-Y Growth

Q3 2006



Q2 2006



Q1 2006



Q4 2005



Q3 2005



In millions.

Thankfully, Provigil won't face generic competition until early 2012, because Cephalon doesn't have much of a drug pipeline to make up for lost sales.

For the quarter, gross margins were flat at 87%, and adjusted operating income was up significantly to $168 million, driving $1.61 in adjusted earnings per share.

The increased revenue estimate for 2006 is approximately 32% higher than 2005's revenues. Unfortunately, because of generic competition for one of its products, Actiq, sales are expected to be roughly flat for 2007. Stlll, adjusted earnings will be down to $4.50-$4.60 a share from the $5.10-$5.20 the company will earn per share this year.

There was one success this quarter with Cephalon's pipeline; a follow-on drug named Fentora was finally given full approval and a should take over for its over $400 million-a-year pain drug Actiq, just as generic competition starts to eat away at Actiq sales. The other pipeline development this quarter was the FDA rejection for approval of Cephalon's ADHD drug candidate, Sparlon, which prompted Cephalon to cancel the development program.

Trading at less than three times sales and roughly 15 times 2007 earnings estimates, shares of Cephalon aren't exactly expensive, even discounting its drug pipeline completely (which does have some value). Other than using some of the gobs of cash that it is throwing off as a dividend to assuage investors as they wait for sales to grow again in 2008, there's not much to quibble about with Cephalon right now. And that's a rare thing to say about any biopharmaceutical company.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.