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Actavis plc’s (ACT - Analyst Report) third quarter 2013 earnings of $2.09 per share were a penny short of the Zacks Consensus Estimate but up 55% from the year-ago period.

Revenues for the reported quarter came in at approximately $2,013 million, up 56.6% from the year-ago period, but slightly below the Zacks Consensus Estimate of $2,043 million.

Quarterly Details

Actavis operates through three segments: Actavis Pharma, Actavis Specialty Brands and Anda Distribution.

The Actavis Pharma segment posted sales of $1.6 billion, up 69%. Results benefited from the Actavis Group acquisition late last year. Moreover, revenues were driven by new product launches including the generic versions of Suboxone sublingual tablets and Lidoderm. Generic Concerta sales, however, were impacted by the entry of competition.

International revenues were strong at $609.3 million, up 208%, reflecting the inclusion of legacy Actavis products.

Actavis has also launched its generic version of Opana ER and gained FDA approval for its generic version of Lamictal ODT.

Actavis Specialty Brands revenues came in at $153.8 million, up 27%. Increased contributions from products like Rapaflo, Crinone and Generess Fe and Oxytrol OTC (sales commenced from the second quarter of 2013) aided the performance of the segment.

Net revenues from the Anda Distribution segment increased 26% during the quarter to $307.1 million reflecting higher chain customer sales.

Raises 2013 Earnings Outlook

With the Warner Chilcott acquisition being completed on Oct 1, 2013, Actavis raised its earnings outlook for 2013. The company now expects earnings of $9.26 - $9.39 per share. Earlier, the company had guided towards earnings in the range of $8.15 - $8.50 per share.

The Zacks Consensus Estimate of $8.34 is well below the company’s new guidance range and we expect significant upward revisions in earnings estimates for 2013. Meanwhile, fourth quarter earnings are expected to be between $2.95 and $3.05 per diluted share. The Zacks Consensus Estimate of $2.24 is again below the company’s guidance range.

Total revenues are expected to be about $8.6 billion in 2013, up from the earlier guidance of $8.1 billion. The Zacks Consensus Estimate for revenues is currently $8.0 billion.

Actavis also provided a preliminary outlook for 2014. Actavis expects earnings of $12.25 - $13.00 per share in 2014. The Zacks Consensus Estimate of $12.74 is within the company’s guidance range.

Actavis currently carries a Zacks Rank #2 (Buy). We are positive on the company’s acquisition of Warner Chilcott which makes strategic and financial sense. The deal, which will be immediately accretive, will also provide strong operating cash flow and allow Actavis to de-lever its balance sheet. The tax rate will also be significantly below earlier levels.

With fewer major patent expiries slated to occur in the next few years, we are encouraged by Actavis’ focus on building its branded and biosimilars pipeline.

Currently, companies like Actelion (ALIOF), AMAG Pharmaceuticals, Inc. (AMAG - Snapshot Report) and Akorn, Inc. (AKRX - Snapshot Report) look well-positioned. While Actelion and AMAG are Zacks Rank #1 (Strong Buy) stocks, Akorn is a Zacks Rank #2 stock.

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