Lannett (LCI) is getting a nice pop this morning after reporting strong fourth-quarter earnings last night that included guidance that was met with analysts’ recently raised expectations. After reviewing the report carefully and listening to the conference call, the company does not have any catalysts that I believe are strong enough to push shares significantly higher in the near term to warrant raising our target. I recommend that you sell LCI and book profits of around 60%.

LCI still has a solid growth profile, and it is possible that earnings estimates could be raised again. However, I believe this is discounted in current June 2013 and 2014 estimates of $0.23 and $0.34, respectively. Management is also looking to add more manufacturing capacity to allow for future growth, and this could end up restricting gross margin expansion, which has been an important part of the stock’s recent explosive move higher.

The stock has indeed jumped quickly for us, up over 50% in less than three months, and is now reflecting a lot of potential earnings improvement. Generic drugs can be a volatile business, and our best move is to pocket these gains on today’s earnings momentum before any air comes out of the shares. Sell LCI.