Endo (ENDP) Q3 Earnings: Will the Stock Pull a Surprise?
Endo International plc ENDP is scheduled to report third-quarter 2016 results on Nov 8, before the opening bell. The company has been consistently beating earnings expectations. In fact, Endo posted a positive surprise in each of the trailing four quarters, with an average positive surprise of 6.66%.
Last quarter, the company delivered a positive earnings surprise 14.67%. Will Endo surpass expectations this time around as well?
Let's see how things are shaping up for this quarter.
Factors Influencing This Quarter
On the second-quarter 2016 earnings call, Endo announced that it expects a sequential decline in its third-quarter results. For the third quarter, the company anticipates earnings in the range of 77–82 cents per share on revenues of $830 million to $870 million.
The anticipated decline reflects a number of factors including product order timing benefits seen in the prior quarter, which will reverse in this time, lower U.S. branded sales related to generic competition for Voltaren Gel, continued slowdown in the testosterone market, persistent declines in legacy pain products, increased investment in R&D, and higher promotional efforts related to Xiaflex and Belbuca.
Endo’s Generics base business continued to be under pressure with revenues declining approximately 5% sequentially in the second quarter of 2016, due to consortium pricing pressures and additional competitive entrants.
Endo’s Branded segment is also facing pressure due to stiff competition, and a number of public policy and regulatory actions including the recent CDC guidelines related to opioid prescribing and use. The company continues to witness pressure in terms of prescription volumes in the opioid space.
On the third-quarter call, investors are expected to focus on the company’s performance. Updates on its restructuring efforts across the Generics product and R&D portfolio, as well as its manufacturing facility network should also be awaited keenly.
Earnings Whispers
Our proven model does not conclusively show that Endo is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 81 cents.
Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Zacks Rank: Although Endo’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
ENDO INTL PLC Price and EPS Surprise
ENDO INTL PLC Price and EPS Surprise | ENDO INTL PLC Quote
Stocks that Warrant a Look
Here are some health care stocks that you may want to consider instead, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
ARIAD Pharmaceuticals Inc. ARIA is scheduled to report third-quarter results on Nov 7. It has an Earnings ESP of +5.26% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Aquinox Pharmaceuticals Inc. AQXP is +3.33% and it carries a Zacks Rank #3. The company is expected to release third-quarter results on Nov 8.
Synergy Pharmaceuticals, Inc. SGYP is expected to report third-quarter results on Nov 14. It has an Earnings ESP of +18.18% and a Zacks Rank #3.
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ENDO INTL PLC (ENDP): Free Stock Analysis Report
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