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Endo (ENDP) Up 5.8% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

It has been about a month since the last earnings report for Endo International (ENDP). Shares have added about 5.8% in that time frame, outperforming 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 Q2 Earnings & Revenues Beat Estimates, Down Y/Y

Endo reported better-than-expected results for second-quarter 2019. The company’s earnings of 52 cents in the reported quarter easily beat the Zacks Consensus Estimate of 47 cents. However, earnings declined from 76 cents in the year-ago quarter.

Revenues came in at $699.7 million in the quarter, surpassing the Zacks Consensus Estimate of $697 million but decreasing 2% from the year-ago quarter’s figure. The decrease was primarily attributable to competitive pressure in the Generic Pharmaceuticals segment, the Established Products portfolio of the Branded Pharmaceuticals segment and the International segment. Nevertheless, strong growth in the Sterile Injectables segment and the Specialty Products portfolio of the Branded Pharmaceuticals segment partially offset the decline.

Quarterly Highlights

Endo has four reportable business segments — Branded Pharmaceuticals, Generic Pharmaceuticals, Sterile Injectables and International Pharmaceuticals.

Branded Pharmaceuticals revenues were $209 million, down from $213 million in the year-ago quarter due to the ongoing generic competition in Established Products portfolio.  Specialty Products revenues increased 17% to $124 million, driven by the continued strong performance of Xiaflex. Sales of Xiaflex increased 18% to $75 million, owing to higher demand in the Peyronie's Disease and the Dupuytren's Contracture indications, driven by continued commercial execution and investment in promotional activities.

The company is on track to submit a BLA for the collagenase clostridium histolyticum program for the treatment of cellulite in the second half of 2019.

Generic Pharmaceuticals recorded sales of $218 million in the quarter, down 9.5% due to competitive pressure in the generic business. During the quarter under review, this segment launched three products.

Sterile Injectables revenues came in at $244 million, up 12% year over year, driven by strong growth of Adrenalin and Vasostrict.  In July 2018, the segment launched the ertapenem injection, the authorized generic of Invanz, which boosted sales.

International Pharmaceuticals revenues were $29 million, down from $43 million in the year-ago quarter.

2019 Outlook Reiterated

Endo expects revenues between $2.76 billion and $2.96 billion for 2019. The company expects Xiaflex’s full-year revenues to grow mid-to-high teens. The company anticipates earnings from continuing operations to be $2.00-$2.25 per share.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Endo has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.

Outlook

Endo has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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