Endo Cuts EPS View, CEO to Retire
Endo Health Solutions Inc. (ENDP), a diversified healthcare company, recently announced that there will be a change at its helm next year. The incumbent Chief Executive Officer (CEO) and president of the company, Mr. David P. Holveck, will step down by May 2013. Endo Health stated in its press release that Mr. Holveck will also resign from its board of directors following his retirement from the post of CEO.
Mr. Holveck, who joined the company in April 2008, will continue serving Endo Health in his present capacities until his successor is found or the annual meeting for Endo Health’s shareholders scheduled for May 2013, whichever is earlier. Endo Health is currently on the lookout for a suitable candidate to replace Mr. Holveck. The company is considering candidates from both inside as well as outside the company for the purpose.
Apart from announcing the impending management change, Endo Health also trimmed its earnings projection for 2012. Endo Health, which performed disappointingly in the third quarter of 2012 mainly due to the lackluster sales of its painkiller, Opana ER, now expects to end 2012 with adjusted earnings at or below the low end of its previously forecasted range of $5.00 -$5.10 per share. The Zacks Consensus Estimate for 2012 is $5.01 per share.
The company also withdrew its guidance for 2013. Endo Health had earlier forecasted 2013 adjusted earnings in the range of $5.20-$5.40 per share on revenues of $3.0 - $3.2 billion. Endo, however, believes that it is no longer in a position to achieve the guidance. The company intends to unveil its new guidance for 2013 next month. We believe that the continued lackluster performance of Opana ER and the entry of a generic competitor, Watson Pharma (WPI), for Endo Health’s lead drug Lidoderm in September 2013 are responsible for the company withdrawing its 2013 guidance.
We have a Neutral recommendation on Endo Health. The stock carries a Zacks #3 Rank (Hold) in the short run. Health care stocks which carry a Zacks #2 Rank (Buy) include Allergan, Inc. (AGN).
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