Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

We expect Forest Laboratories Inc. (FRX - Analyst Report) to miss earnings expectations when it reports fourth-quarter fiscal 2013 results on Apr 23, before the opening bell. Forest Labs’ fiscal year ends on Mar 31.

Why a Likely Negative Surprise?

Our proven model does not conclusively show that Forest Labs is likely to beat earnings this quarter. That is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. Unfortunately this is not the case here as elaborated below.

Negative Zacks ESP: This is because the Most Accurate estimate stands at 18 cents while the Zacks Consensus Estimate is higher at 19 cents. This results in a difference of -5.26%.

Zacks Rank #3 (Hold): Forest Labs’ Zacks Rank #3, however, complicates the predictive power of ESP. This combined with a negative earnings ESP makes Forest Labs an unlikely candidate for an earnings beat this quarter. We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

Factors at Play for 4Q

In the preceding quarter Forest Labs’ results were hit by the loss of exclusivity of Lexapro as well as the disappointing performance of Namenda. We expect the company’s results will continue to be affected by generic competition for Lexapro and the performance of Namenda, which is expected to face generic competition in early 2015. Moreover, the performance of new products, especially Teflaro, has been below expectations over the last few quarters.

Stocks to Consider

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Eli Lilly and Company (LLY - Analyst Report) has an Earnings ESP of +3.85% and holds a Zacks Rank #3 (Hold)

GileadSciences (GILD - Analyst Report) has an Earnings ESP of +2.08% and carries a Zacks Rank #3 (Hold).

VIVUS Inc. (VVUS - Snapshot Report), has an Earnings ESP of +11.77% and carries a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%