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Dr. Reddy's (RDY) to Report Q3 Earnings: What's in Store?

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Dr. Reddy’s Laboratories Ltd. (RDY - Free Report) is scheduled to report third-quarter fiscal 2019 results, before market opens, on Feb 1.

Dr. Reddy’s shares have increased 4% in the past year, against the industry’s decline of 19.8%.

 

Let’s see how things are shaping up for this announcement.

Factors at Play

Dr. Reddy’s North America base business is witnessing pricing pressures since the last few quarters, due to enhanced channel consolidation and increased competitive pressure on sales of some of its key generic products. We do not expect to see any improvement in this negative trend in the upcoming quarter’s results.

The U.S. generics industry is facing significant competitive and pricing pressures. The ongoing consolidation of customers in the industry has led to increasing price erosion and decreasing volume. The consolidation in the industry has increased the ability to negotiate lower prices for generic drugs. A sharp decline in generic drug prices is proving to be a major challenge for generic drug makers and distributors.

Moreover, the FDA is speeding up the approval of generic drugs, which means more competition, increased price cuts and decreased volumes. The pricing and competitive pressures are expected to continue in 2019.

However, the Global Generics segment is expected to improve, driven by growth in the emerging markets and India. Revenues from the Pharmaceutical Services & Active Ingredients (“PSAI”), and Proprietary Products and Others segments are also expected to rise in the third quarter.

Dr. Reddy’s also launched few generics in the quarter. The company launched the generic version of Lilly’s (LLY - Free Report) Strattera in the United States. It also launched Aspirin and Extended-Release Dipyridamole capsules, a therapeutic equivalent generic version of Aggrenox (aspirin and extended-release dipyridamole) capsules.

Dr. Reddy’s also launched the therapeutic equivalent generic version of Renvela (sevelamer carbonate) for Oral Suspension. These should add to revenues of the company in the to-be-reported quarter.

Dr. Reddy’s currently carries a Zacks Rank #4 (Sell).

 

 

Stocks That Warrant a Look

Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter. According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 or #5 (Strong Sell) stocks are best avoided.

Allergan Plc has an Earnings ESP of +2.80% and a Zacks Rank #3. The company is scheduled to release second-quarter report on Jan 29.

Bausch Health Cos Inc. (BHC - Free Report) has an Earnings ESP of +6.08% and a Zacks Rank #3. The company is scheduled to release second-quarter results on Feb 20.

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