UPDATE: Bank of America Downgrades Salix Pharmaceuticals, Keeps PO

In a report published Tuesday, Bank of America Merrill Lynch analyst Gregg Gilbert downgraded Salix Pharmaceuticals (NASDAQ: SLXP) to Underperform from Neutral, keeping its $86.00 price objective.

According to the report, SLXP's base business has been performing well, led by continued solix Xifaxan growth for hepatic encephalopathy and strong share gains for Apriso following a disruptive competitor launch in the ulcerative colitis market. The analysts believe continued strong growth for both will be necessary to support the stock.

“SLXP was one of the better performing stocks in 2013 within our Specialty Pharma coverage group with a 122% return,” the report said. “Over the last few months, we've raised our PO to reflect stronger performance for the base business, more credit for the late-stage pipeline, and significant contribution from the Santarus acquisition (announced on 11/7). With the stock now trading above our PO, which we believe reflects a relatively bullish set of assumptions, we are moving to an Underperform rating.”

SLXP closed Monday at $90.43.