It has been about a month since the last earnings report for Endo International (ENDP). Shares have added about 1.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Endo due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Endo Q1 Earnings Beat on Coronavirus-Led Stockpiling
The company’s earnings of 95 cents easily beat the Zacks Consensus Estimate of 54 cents in the reported quarter and rose from the year-ago quarter’s 60 cents.
Revenues came in at $820.4 million in the quarter, surpassing the Zacks Consensus Estimate of $714 million and increasing 14% from the year-ago quarter. The increase was attributable to strong growth in the Sterile Injectables segment and the Specialty Products portfolio of the Branded Pharmaceuticals segment. Recent product launches in the Generic Pharmaceuticals segment also boosted performance. Moreover, sales benefited from higher patient demand and increased customer inventory purchasing due to the COVID-19 pandemic. However, continued competitive pressure in the Established Products portfolio of the Branded Pharmaceuticals segment partially offset the increase.
Endo has four reportable business segments — Branded Pharmaceuticals, Generic Pharmaceuticals, Sterile Injectables and International Pharmaceuticals.
Branded Pharmaceuticals revenues were $204 million, flat year over year as growth in the segment's Specialty Products portfolio was offset by the ongoing generic competition in the segment's Established Products portfolio. Specialty Products revenues increased 17% year over year to $134 million, primarily driven by the strong performance of Xiaflex. Sales of Xiaflex grew 30% to $89 million owing to demand growth in both Peyronie's Disease and Dupuytren's Contracture indications, driven by continued commercial execution and investments in promotional activities.
In November 2019, the FDA accepted the company's original Biologics License Application (BLA) for its Collagenase Clostridium Histolyticum (CCH) product for the treatment of cellulite in the buttocks. The target action date for the BLA has been set for Jul 6, 2020. Endo is moving its anticipated product launch to first-quarter 2021, pending FDA approval, due to the COVID-19 pandemic.
Sterile Injectables revenues came in at $336 million, up 25% year over year.
The upside was led by robust growth of Adrenalin and Vasostrict, resulting primarily from increased sales volume toward the end of the quarter due to higher utilization mainly to treat patients infected with COVID-19, increased channel inventory stocking and price.
Generic Pharmaceuticals reported sales of $251 million in the quarter, up 15% on recent product launches and accelerated prescription fulfillment arising from COVID-19 concerns.
International Pharmaceuticals revenues came in at $29 million, flat year over year.
The company withdrew its earlier provided guidance (revenues of $2.72-$2.92 billion and earnings of $2.15 -$2.40 per share) due to uncertainties regarding the continued impact of the COVID-19 pandemic.
For the second quarter, Endo anticipates the Sterile Injectables segment’s revenues to increase sequentially owing to higher utilization and channel inventory stocking. However, revenues from Branded Pharmaceuticals and Generic Pharmaceuticals are estimated to decline sequentially.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -22.99% due to these changes.
At this time, Endo has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Endo has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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