After the close on Thursday, Cephalon (CEPH: sentiment, chart, options) announced first-quarter earnings came in at $38.9 million, or 52 cents per share, down from its year-ago profit of $75.2 million, or 99 cents per share. Excluding items, earnings would have come in at $1.12 per share. Sales during the quarter rose 2.4% to $433.9 million. Analysts had predicted a profit of 97 cents per share on revenue of $443 million.

Looking ahead to the second quarter, CEPH forecasts sales of $455 million to $465 million and adjusted earnings of $1.10 to $1.20 per share. The consensus estimate stands at $1.05 per share on revenue of $461 million. The company also projected 2008 sales of $1.83 billion to $1.88 billion and adjusted per-share earnings of $5.10-$5.20. For 2008, the consensus estimate comes in at $4.53 per share on revenue of $1.86 billion.

Despite the positive earnings news, the shares of CEPH are down 3.6% this morning following documents released by the U.S. Food and Drug Administration that said approving Cephalon's Fentora pain drug for patients without cancer could have "devastating effects." The firm is hoping to get wider U.S. approval to market Fentora, or fentanyl, to treat sudden pain in non-cancer patients who have developed a tolerance to other opioid drugs. Fentora has already been approved in the United States for pain flare-ups in cancer patients. Bob Rappaport, head of the FDA's Division of Anesthesia, Analgesia and Rheumatology Products wrote "We are concerned that the sponsor's request to expand the current indication for Fentora ... may greatly increase the prescribing of this product which may increase the availability of the product for diversion, abuse and misuse."

Today's drop following Thursday's 1.5% gain in the shares. The stock was halted at its declining 20-day trendline yesterday and has fallen back below its 10-day moving average today. These short-term trendlines have guided the shares lower since the beginning of April. In fact, the stock has been edging lower since reaching a peak in July 2007.

Meanwhile, Wall Street has high hopes for the shares. According to Zacks, the firm has earned 16 "buy" ratings and 3 "holds." This configuration leaves the shares vulnerable to potential downgrades.