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Dr. Reddy's (RDY) Earnings and Revenues Improve Y/Y in Q2

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Dr. Reddy's (RDY) Earnings and Revenues Improve Y/Y in Q2

Dr. Reddy's (RDY) surpasses earnings and revenue estimates on strength across segments in the second quarter of fiscal 2019.

Dr. Reddy's Laboratories Ltd. RDY reported second-quarter fiscal 2019 earnings of 42 cents per share, up from 24 cents in the year-ago quarter, per American Depositary Share (ADS).

Moreover, revenues increased 7% year over year to $524 million. Revenues also surpassed the Zacks Consensus Estimate of $522 million.

Year to date, shares of the company have declined 6.5%, against the industry’s growth of 3.7%.

 

Quarter in Detail

Dr. Reddy’s reported revenues under three segments — Global Generics, Pharmaceutical Services & Active Ingredients (“PSAI”), and Proprietary Products and Others.

Global Generics revenues increased about 6.7% year over year to $421 million during the second quarter. The growth was led by contributions from Emerging Markets, India and favorable foreign exchange.

PSAI revenues were $83.1 million, up 6.6% from the year-ago quarter.

Revenues at the Proprietary Products and Others segment came in at $19.5 million, up 18.9% from the year-ago quarter.

Further, research and development expenses were down 1% year over year to $57 million.

Selling, general and administrative expenses were $171 million, up 12% year over year.

As of Sep 30, 2018, Dr. Reddy’s has 113 generic filings (110 abbreviated New Drug Applications [ANDAs] and three new drug applications) that are pending for the FDA approval. Of these ANDAs, 63 were Para IV filings and 32 have first-to-file status.

Our Take

In second-quarter fiscal 2019, Dr. Reddy’s top and bottom lines registered year-over-year growth. The company’s focus on operational efficiencies helped in significantly improving its margin profile. However, the company expects to experience price erosion in the North America Generics market. The European market is also witnessing a decline due to higher price erosion in some of the key molecules.

Dr. Reddy's Laboratories Ltd Price, Consensus and EPS Surprise

Dr. Reddy's Laboratories Ltd Price, Consensus and EPS Surprise | Dr. Reddy's Laboratories Ltd Quote

Zacks Rank & Stocks to Consider

Dr. Reddy’s has a Zacks Rank #3 (Hold).

Some top-ranked stocks in the biotech sector are CRISPR Therapeutics AG CRSP, Genmab A/S GNMSF and Gilead Sciences, Inc. GILD. While CRISPR and Genmab hold a Zacks Rank #1 (Strong Buy), Gilead sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CRISPR Therapeutics’ loss per share estimates have narrowed from $2.95 to $2.92 for 2018 over the past 60 days. The company delivered a positive earnings surprise in two of the trailing four quarters with an average beat of 19.50%. Share price of the company has increased 70.6% year to date.

Genmab’s earnings per share estimates have moved up from $3.33 to $3.39 for 2018 and from $5.00 to $5.59 for 2019 in the past 60 days.

Gilead’s earnings per share estimates have moved up from $6.59 to $6.63 for 2018 and from $6.48 to $6.61 for 2019 in the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 6.99%.         

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