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Endo (ENDP) Beats on Q1 Earnings, Reaffirms '17 Guidance

Zacks Equity Research

Endo International plc’s ENDP first-quarter 2017 earnings from continuing operations was $1.23 per share which topped the Zacks Consensus Estimate of $1.12. Earnings were also above the year-ago figure of $1.08.

 

Revenues came in at $1.03 billion in first-quarter of 2017, up 8% year over year, in line with the Zacks Consensus Estimate.

Shares of the company gained 6.9% following the release. However, we note that shares of Endo have underperformed the Zacks classified Medical-Drugs industry year to date. Specifically, the stock was down 34.1% during this period in comparison to industry’s gain of 3.3%.

 

Quarterly Highlights

The company reports results through three segments – Branded Pharmaceuticals (U.S.), Generic Pharmaceuticals (U.S.) and International Pharmaceuticals.

U.S. Branded Pharmaceuticals sales were down 19% to $250 million, reflecting generic entry for Voltaren Gel, Frova, Opana ER and Lidoderm, and divestiture of Stendra. Voltaren Gel sales were down 60% year over year to approximately $14.3 million. Sales of pain products Lidoderm and Opana ER were down 33% and 20%, respectively. However, Xiaflex sales increased 12% year over year reflecting double-digit demand growth for the product.

U.S. Generic Pharmaceuticals recorded sales of $722 million in the quarter, up 24% from the year-ago period owing to the launches of the generic version of Seroquel XR and Zetia. Segment revenues also benefited from the robust performance of sterile injectables. However, generics base business revenues declined approximately 32% due to increased competition and previously announced product discontinuances.

The International Pharmaceuticals division garnered sales of $65 million, down 8% year over year. Endo's previously announced divestiture of its South African subsidiary, Litha Healthcare Group to Acino Pharma (AG) is expected to close in the second quarter of 2017, subject to customary conditions. The company also announced that  due diligence had begun on the potential divestiture of its Mexican subsidiary, Somar, which is in progress.

2017 Outlook

Endo reiterated its guidance for revenues and earnings per share for 2017. It expects revenues in the range of $3.45 billion to $3.60 billion. Also, the company projects continuing operations to be in the range of $3.45 to $3.75 per share. The Zacks Consensus Estimate for earnings is pegged at $3.63 per share on revenues of $3.55 billion.

Endo International PLC Price, Consensus and EPS Surprise

Endo International PLC Price, Consensus and EPS Surprise | Endo International PLC Quote

Zacks Rank & Stocks to Consider

Endo currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the health care sector include Infinity Pharmaceuticals, Inc. INFI, Galena Biopharma, Inc. GALE and BioTime, Inc. BTX. While Infinity and Galena sport a Zacks Rank #1 (Strong Buy), BioTime has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Infinity’s loss per share estimates narrowed from $1.43 to $1.03 and from $1.75 to $1.52 for 2017 and 2016, respectively, over the last 60 days. The company posted positive earnings surprises in three of the four trailing quarters, with an average beat of 36.64%.

Galena’s loss per share estimates narrowed from $2.03 to 58 cents for 2017 over the last 60 days. The company posted positive earnings surprises in two of the four trailing quarters, with an average beat of 53.83%.

BioTime’s loss per share estimates narrowed 60.9% to 18 cents for 2017 over the last 60 days. The company posted a positive earnings surprise in two of the four trailing quarters with an average beat of 12.32%. Its shares have increased 6.9% in the last year.

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