Noven Pharmaceuticals, Inc.

Noven Pharmaceuticals, Inc. (NOVN) surprised on estimates by 60% in the third quarter as revenue rose 18%. The company has surprised on estimates 3 out of the last 4 quarters by an average of 36.67%. NOVN is trading at 14.5x forward earnings.

Company Description

Noven Pharmaceuticals manufactures specialty drugs in three areas, transdermal drug delivery, the Novogyne joint venture with Novartis, and Noven Therapeutics. Noven's transdermal products include Vivell-Dot, the most prescribed estrogen patch in the U.S. and Daytrana, the only patch approved for the treatment of ADHD.

Noven Beat Wall Street Estimates by 60% in the Third Quarter

On Nov 6, Noven announced third-quarter results that surprised on analysts' estimates by 9 cents per share. Net income was $5.2 million, or 21 cents a share. Excluding items and tax effects, net income was $5.9 million, or 24 cents, compared to $7.6 million, or 30 cents per share, in the third quarter of 2007. Analysts expected 15 cents.

Revenue rose 18% to $25.7 million from a year ago due to the acquisition of Noven Therapeutics on Aug 14, 2007 and increased license and contract revenues. The company also launched Stavzor in August 2008 after the drug got FDA approval in July.

Consensus Estimates Rise for 2008

Analysts are upbeat about the remainder of 2008 as fourth quarter estimates are up 9 cents to 22 cents in the last 60 days. Full year estimates moved 28.3% higher to 77 cents from 60 cents in the last 2 months.

The story is less clear for 2009 as consensus estimates are currently trending 1.77% under 2008 estimates. Estimates are up 4 cents to 76 cents in the last 60 days. Analysts expect 5-year earnings growth of 20%.

Value Fundamentals

Noven Pharmaceuticals is a Zacks #1 Rank (strong buy) stock. It is trading at 14.5x forward earnings. The company's price-to-book is 1.83. Noven has a solid 5-year return on equity (ROE) of 11.08%.