Why Is Impax Laboratories (IPXL) Down 1% Since Its Last Earnings Report?
It has been about a month since the last earnings report for Impax Laboratories, Inc. IPXL. Shares have lost about 1% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is IPXL due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Impax Q4 Earnings & Revenues Miss Estimates, Fall Y/Y
Impax reported fourth-quarter 2017 adjusted earnings of 11 cents per share, missing the Zacks Consensus Estimate of 12 cents. Earnings were also down 31.3% from 16 cents in the year-ago period owing to lower generic product revenues.
Total revenues declined 7.8% year over year to $182.9 million, mainly due to lower Generic division sales, partially offset by increased specialty products sales.
Revenues also missed the Zacks Consensus Estimate of $196.26 million.
Quarter in Detail
During the reported quarter, Impax Generic division’s revenues fell 18.9% from the year-ago quarter to $112.9 million. The drop in revenues was due to lower sales of diclofenac sodium gel, metaxalone, fenofibrate and budesonide. This was partially offset by higher sales of epinephrine auto-injector, the product acquired from Teva Pharmaceuticals and product launches.
However, revenues from the Impax Specialty Pharma division were up 18.2% year over year to $70 million, largely due to a 29.8 % jump in Rytary sales to $28.3 million. Sales of Zomig were up 10.7% to $15 million.
Adjusted research and development (R&D) expenses contracted 21.9% to $15.6 million in the reported quarter.
Adjusted selling, general and administrative expenses (SG&A) increased 3.4% to $51.6 million.
2017 Performance
In 2017, adjusted earnings per share were 63 cents compared with $1.16 in 2016. Earnings were in line with the Zacks Consensus Estimate.
Revenues for 2017 totaled $775.8 million, down 5.9% from $824.4 million in 2016. Revenues missed the Zacks Consensus Estimate of $793.3 million.
Other details
In October 2017, Impax and privately-held generic drug maker, Amneal Pharmaceuticals, entered into an all-stock deal to merge and form a new publicly-traded company, Amneal Pharmaceuticals Inc. The combined company will have a diverse pipeline with more than 300 products, either filed with the FDA or in active stages of development. The deal is expected to close in the second quarter of 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
Impax Laboratories, Inc. Price and Consensus
Impax Laboratories, Inc. Price and Consensus | Impax Laboratories, Inc. Quote
VGM Scores
At this time, IPXL has a nice Growth Score of B. Its Momentum is doing a bit better with an A. The stock was also 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.
Based on our scores, the stock is equally suitable for value and momentum investors while growth investors may want to look elsewhere.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise IPXL has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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