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Why Is Endo (ENDP) Up 10.5% Since Last Earnings Report?

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Zacks Equity Research
·3 min read
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It has been about a month since the last earnings report for Endo International (ENDP). Shares have added about 10.5% 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 catalysts.

Endo Q3 Earnings & Sales Top Estimates, View Raised

Endo beats on both earnings and sales in the third quarter, driven by growth in its Branded Pharmaceuticals segment as utilization of physician-administered products continues returning to pre-COVID-19 levels.

The company’s earnings of 52 cents easily beat the Zacks Consensus Estimate of 14 cents in the reported quarter but declined from the year-ago quarter’s 66 cents.

Revenues came in at $634.9 million in the quarter, surpassing the Zacks Consensus Estimate of $558 million but decreasing 13% from the year-ago quarter. The decline was attributed to lower Generic Pharmaceuticals segment’s revenues.

Quarterly Highlights

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

Branded Pharmaceuticals revenues were $223.6 million, up 3% year over year. Within the segment, Specialty Products revenues increased 6% to $140.1 million. Sales of Xiaflex increased 7% to $88.1 million. However, Established Products revenues decreased 2% to $83.5 million.

Sterile Injectables revenues came in at $251.4 million, down 5% year over year as a result of lower Aplisol revenues due to a nonrecurring resupply benefit witnessed in third-quarter 2019 and the ongoing competitive pressure on certain products. The decrease was somewhat offset by increased Vasostrict revenues.

Generic Pharmaceuticals reported sales of $136 million in the quarter, down 38% due to continued competitive pressure on certain key products.

International Pharmaceuticals revenues came in at $24.3 million, down 20% year over year.

During the quarter, Endo also announced a fill-finish manufacturing and services agreement for Novavax's COVID-19 vaccine candidate, NVX-CoV2373.

2020 Guidance Raised

Endo raised its annual guidance. Revenues for 2020 are now projected to be $2.75-$2.80 billion, up from the earlier projected range of $2.60-$2.70 billion. Adjusted earnings per share are now estimated to be $2.50-$2.55 (previous guidance: $2-$2.15).

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 20% due to these changes.

VGM Scores

Currently, Endo has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, 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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