Back to top

Analyst Blog

Valeant Pharmaceuticals’ (VRX - Snapshot Report) first quarter 2013 earnings of $1.27 (excluding special items but including stock-based compensation expense) were short of the Zacks Consensus Estimate by a penny but were up from the year-ago earnings of 1.08 per share.

Revenues for the quarter were $1.07 billion, up 25% from the year-ago period. The year-over-year improvement in revenues was primarily attributable to higher product sales. However, revenues missed the Zacks Consensus Estimate of $1.08 billion.

Quarterly Highlights

Product sales at Valeant Pharma amounted to $1.04 billion during the first quarter of 2013, up 38% year over year. Strong sales in the US Promoted (previously US Dermatology) and Emerging Markets segments contributed to the increase.

US Promoted product sales increased 91% to $479 million fueled by solid growth in key brands such as Acanya, CeraVe, Arestin, Dysport, Restylane, Perlane and AcneFree. Organic growth (same store sales) was approximately 6%. Product sales from the emerging markets grew 27% year over year.

On a pro forma basis, (excluding the impact of foreign exchange) total revenues grew 25% from the year-ago quarter.

Research & development (R&D) expenses climbed 8.1% to $23.8 million.

Selling, general & administrative (SG&A) expenses for the first quarter of 2013 increased 36.4% to $241.9 million due to the integration of Medicis operations.

We note that in Dec 2012, Valeant Pharma acquired the entire outstanding common stock of erstwhile Medicis Pharmaceutical Corporation for approximately $2.6 billion.

Guidance Updated

Valeant Pharma updated its guidance for 2013. Valeant continues to expect revenues between $4.4 billion and $4.8 billion in 2013, up 30% from 2012, excluding potential acquisitions apart from the Natur Produkt acquisition (which was completed in Feb 2013). Nevertheless, earnings per share on a cash basis are now projected around $5.55 –$ 5.85, up from the earlier projection of $5.45 – $5.75. The guidance includes a loss of 35 to 40 cents from the launch of Mylan’s (MYL - Analyst Report) generic version of Valeant Pharma’s Zovirax ointment in Apr 2013.

The Zacks Consensus Estimate for 2013 hints at earnings of $5.65 per share on revenues of $4.55 billion.

Valeant expects to obtain synergies of more than $300 million by the end of 2013 from the Medicis acquisition, up from the previous estimate of $275 million. The company recently completed the acquisition of Obagi Medical which is expected to generate synergies of $50 million by the end of 2013.

Valeant Pharma currently carries a Zacks Rank #3 (Hold). Right now, Onyx Pharmaceuticals, Inc. and WuXi PharmaTech (Cayman) Inc. (WX - Snapshot Report) look better positioned with a Zacks Rank #1 (Strong Buy).

We are reissuing this article to correct a mistake. The original article, issued Friday, May 3, 2013, should no longer be relied upon.

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

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
SYNAPTICS I… SYNA 78.11 +8.14%
GREEN PLAIN… GPRE 39.41 +5.12%
PILGRIM'S P… PPC 28.82 +3.08%
SKYWORKS SO… SWKS 52.07 +2.58%
CLAYTON WIL… CWEI 109.08 +2.51%