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Taro Pharmaceutical Industries Ltd. Message Board

moydegem 9 posts  |  Last Activity: Nov 13, 2014 9:23 PM Member since: Feb 14, 2012
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  • moydegem moydegem Nov 13, 2014 9:23 PM Flag

    The market wants to see growth in sales and profits a year after year. Opportunistic pricing has reached saturation, so pricing is not going to be drive growth in the near future. According to analysts, Taro’s pipeline will start kicking in some profits only in late 2016 early 2017 so pipeline is out of the picture for the near future. Sun-Taro’s mgmt is reluctant to develop Taro’s business – no new markets, and no acquisitions.
    So what is left? A buyback which will give the stock a onetime spike, and the potential of a buyout. $13.5 E per year is nice, but without real growth the market tends toward lower P/E (16?). I think that Taro is currently cheap, but I don’t see its share growing as in the past. Whatever it is, I think that Taro’s returns will be much better than the market’s average, and that is why I am still sticking with Taro.

  • An excerpt from the conference call transcript:
    -------------
    Unidentified Analyst: I have the very simple query and I have got this queue from the response that you just gave, Taro basically has presence in say North America, what about geographical expansion of Taro are you looking at it?
    Dilip Shanghvi: Kal, would you like to respond?
    Kal Sundaram: Yes. So our main focus has been U.S and Canada, if you look beyond U.S. and Canada, I will set a probably if you thinks into few components here up in Japan, advanced markets then the rest of them are emerging markets. For emerging markets we don't have anything set of specifics to offer as the portfolio, most of these products are available in these markets. Those markets are fairly competitive. Japan's regulated requirements will require us to totally redevelop the products if we decide to go down that road so what remains is only Europe. We will continue to evaluate opportunities in Europe.
    Unidentified Analyst: How soon could that be your expansion into Europe?
    Kal Sundaram: Probably difficult to predict at this time.
    Unidentified Analyst: Would you like to set any time length?
    Kal Sundaram: It’s difficult to give any time lines on that.
    Unidentified Analyst: Okay.
    Unidentified Analyst Can you give a time line on, what do you say anything we will [Indiscernible] in Europe?
    Dilip Shanghvi: It's difficult to give any predictable time.
    --------------
    Hello Kal, Dilip, the EU opened its markets to FDA approved Israeli drugs a few years ago- Enough time to consider the European markets, develop a sale network and even start selling into the EU. For obvious reason you have done nothing to develop new markets for Taro products, and all you can say now that it is “difficult” to estimate the time it would take to consider the European markets- this is a dishonest and intelligence insulting answer! We deserve better from our CEO and president. Shame on both of you!

  • Reply to

    On Buybacks, buyouts and stashes

    by moydegem Nov 11, 2014 4:46 PM
    moydegem moydegem Nov 11, 2014 4:47 PM Flag

    (Continues from prior post)
    Sun-Taro used the stashes to its advantage also at the last AGM, and that is why we don’t have a minority rep on the board. Sun can use its stashes in a buyout offer in order to defeat the majority of minority rule, but in order not to raise eyebrows and not to invite lawsuits, the premium will be semi-decent.
    Consolation:
    volume of the last two days of “selloff” is only about %50 above daily average. That does not indicate panic selling.

  • valery164 wrote:
    “I do not think that $180 is the price Institutions will allow to Sun buy Taro. The float (minority holding) is ~12M shares. June 30 institutions holding was 4.6M”

    valery164, you have to take into account that the croox in Mumbai are well ahead of the minority. The stash of 3.917M Taro’s shares parked at BBH “owned by not affiliated shareholders” and probably other stashes that we don’t know about will do the trick for Sun-Taro.
    The convoluted Dutch auction buyback of a few months ago went thru proved it. Even though most of the time that the offer was in affect there was no real premium, and some of time the market’s price surpassed the upper limit of the offer. Therefore, there was no real incentive to tender. Then how come the offer was fully subscribed? – The most plausible explanation I can come up with: Sun “operatives” bought Taro’s shares for long time prior to the offer and tendered it into the Dutch auction.
    For a buyback offer (which is not a buyout) Sun-Taro does not care about the majority of minority.
    In principle, Sun-Taro can offer to buyback $600M of Taro's share at $150/share ( at this moment Taro is at $149) – and it will be fully subscribed! Shares would be tendered out of San-Taro’s stashes, thereby raising Sun’s ownership in Taro without paying a premium. Sun can use Taro’s cash to increase its ownership in Taro without spending a penny out of its own pocket
    (Continues at next post)

  • Reply to

    why is the stock price down?

    by imho_dyodd Nov 10, 2014 10:24 AM
    moydegem moydegem Nov 10, 2014 2:18 PM Flag

    leshgarcia Wrote:
    “You miss the point, that all generic companies have strong pricing at the moment and yet none of them trade at the discounted valuation of taro.”
    My answer:
    The real point is not that “generic companies have strong pricing at the moment”, the real point is whether company and especially Taro can go on forever raising prices- and the answer is definitely –NO. The American congress has started looking into the pricing issue – that by itself means that the price raising is obsessively out of proportions. And margins of %74 are really invitations for other companies to step in- It looks like the party of opportunistic pricing is over and this model will eventually collapse – the markets take care of excesses and exorbitant drug price is definitely an excess!
    Taro needs another growth engine, but for obvious reasons Sun is not interested in letting Taro grow into its real potential!
    As for “discounted valuation of taro” – Taro is not like any other independent company, it is handicapped by been totally controlled by Sun. And therefore Taro’s valuation is inherently worth less than any independent company (One example out of many: No other drug company can even think about buying Taro - so this option does not exist for Taro.).
    Yes, Taro trades at a discount, but for very good reasons!
    Taro at $156.78 -5.35(-3.30%) 2:09PM EST

  • Reply to

    why is the stock price down?

    by imho_dyodd Nov 10, 2014 10:24 AM
    moydegem moydegem Nov 10, 2014 1:02 PM Flag

    Here is a different point of view.
    If you wondered what was the reason and the purpose of the webcast-conference call, in reversal of Taro’s tradition – Prior to publishing the Q results Taro mgmt realized that the quarterly news might be too good and the market would respond positively - They needed to create an opportunity to rain on the parade. So a webcast just before the market opens, with some guiding about the “uncertainty of maintaining the profit level” would give them that opportunity. And indeed the webcast did the trick. Also, Taro rejected the idea of going into emerging markets and Japan and mentioned only Europe as a possibility, but apparently they have no plans to expand into Europe either.
    When asked about Taro’s cash ( $700M)and whether it would be used for inorganic growth, Taro answered that it is too little for an acquisition. Really? DUSA was bought by Sun for $400M. ( and by that Sun became Taro's competitor in dermatology.)
    Investors know that there is a limit to opportunistic pricing (and this limit has probably been reached and considering no market expansion, and no inorganic growth, investors wonder how Taro is planning to grow in the future (pipeline is not enough). The webcast did not answer this question. And the market reacted accordingly.

    At 1pm ET Taro is down $4.11

  • Reply to

    Quarter

    by driver_ch Nov 9, 2014 12:00 PM
    moydegem moydegem Nov 9, 2014 6:36 PM Flag

    Profits are great for now, but do not take your eyes from the ball: Taro’s profit is still based on a house of cards- an opportunistic pricing, and nothing else. The huge margins invite competition that will eventually step in to eat Taro’s lunch. Mgmt, by intention, still does nothing to penetrate ROW, nothing to use its huge cash (which eventually will be looted by Sun) to grow Taro inorganically, minority still has no voice in the board. I still do not trust this management!
    Enjoy while it lasts.

  • Reply to

    First results of institutional fillings

    by valery164 Oct 22, 2014 11:42 PM
    moydegem moydegem Oct 23, 2014 1:18 PM Flag

    We need more institutions holding more than %1 of Taro- those institutions can be activists.
    As of August 15th only ISZO CAPITAL MANAGEMENT LP and HOTCHKIS & WILEY CAPITAL MANAGEMENT LLC owned more than %1 each. CONSONANCE CAPITAL MANAGEMENT LP and RENAISSANCE TECHNOLOGIES LLC need only additional ~50,000 shares each in order to reach more than %1. We’ll see in Nov. 15th.
    I have no knowledge about BM vs. Taro, but it looks like that lawsuit died.

  • Reply to

    big volume last 2 days

    by imho_dyodd Sep 3, 2014 11:03 PM
    moydegem moydegem Sep 7, 2014 1:29 PM Flag

    Please notice the trading pattern of the last few weeks: Taro rises on a very high volume in the first few hours of the trading day, and then it drifts down in the 2-3 hours on extremely low volume. Yet, the vast majority of the shares for the trading day are bought in positive territory (when compared to the previous closing price). That means that much more money went in then money leaving Taro. The very low volume and the repeated pattern toward the closing may indicate stock manipulations.

TARO
143.49-0.85(-0.59%)Nov 28 1:02 PMEST

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