essential cog in the new healthcare
machine will be the availability of low-cost generic medicine for
and perhaps even more importantly for specialized niche care.
extremely important to keep
the production of critical drugs flowing into the hands of consumers in
like Akorn that have a diverse business model, years of experience and
line of drugs and pharmaceutical products that are in demand will
benefit from increases
in coverage and health awareness.
Inc. is a niche generic pharmaceutical company that
develops, manufactures and markets pharmaceutical products in the areas
ophthalmology, antidotes, anti-infectives in addition to controlled
for pain management and anesthesia around the world since 1971.
customer base is well
diversified from physicians to clinics and long term care facilities,
pharmacies and even other pharmaceutical companies. To keep focused on
lines, the company is divided into three segments, Specialty
Therapeutics and Injectable
Pharmaceuticals, Ophthalmologic Pharmaceuticals and Contract
January 17th, AKRS
announced that their revenues would exceed prior estimates for 2011 and
full-year results above the upper end of its prior outlook for both
and adjusted EBITDA of approximately $41 million to $43 million, with
projections between $130 million and $132 million on gross margins of
came on the heels of news that
Akorn’s wholly-owned subsidiary, Oak Pharmaceuticals, acquired three
off-patent, branded, hospital-based injectables from the US subsidiary
Lundbeck A/S. That acquisition will also
immediately contribute directly to their bottom line.
company also intends to expand
its sales force and re-organize them into two distinct focus areas,
and Hospital Injectables. Expansion plans include increased investments
R&D to accelerate product development.
all the news flow and
earnings momentum has been very positive for the stock.
Subsequently, shares of the drug maker are
sharing in that impetus.
Akorn is a small-cap (1.14 billion) company that is trading at about 54
trailing earnings (P/E). This makes it a bit expensive when
it to the broad market average. Looking
forward, Zacks Consensus Estimates are calling for that number to drop
to 30 with no change in price over the next year.
became a Zacks Rank 1 strong
buy on January 20th.
pharmaceutical company reported
a quarterly sales increase of 14% at their last earnings
sales were up 70% compared to Q32010 with total sales of roughly 86.4
in FY2010. AKRX earnings leapt from a 28 cent loss to a 22
cent profit from
FY2009 to FY2010. Akorn is expected to
earn $0.29 in FY2011 according to the Zacks Consensus
Since AKRS is a small cap, only 2 analysts cover the stock, but both
higher for the coming quarters as well as FY2011 and FY2012 in the past
Akorn will report Q42011 results on February 28th.
Expectations are for Akorn to
generate $0.08 in income this quarter. Of the 2 analysts who
the consensus is for the company to grow earnings by 32% in the current
(FY2011) and roughly 36% in FY2012.
terms of the magnitude of analyst
estimate trends, we are seeing all of the consensus estimates higher
were 90 days ago for the current and next quarters as well as FY2011and
beat estimates last quarter by
60% and has averaged to beat estimates by over 64% during the past
Akorn’s chart are almost perfectly what we call “bottom left to top
indicating steady upward price movement over the past year.
The stock has been making new 52 week highs
almost weekly since May of 2010 and trades decent volume for a small
has remained above its 50 day
moving average for most of the year and has not dipped below its 200
day at all
in that time. The averages currently
stand at $11.00 (50 day) and $8.52 (200 day).
trend remains bullish and the
momentum continues for AKRX. The broad
market seems to be the only thing that could disrupt Akorn’s assent.
A disappointing earnings report could also
have the same effect. AKRX has exceeded
the S&P 500’s performance by over 122% in the past year and
12% in the
past 3 months alone. This is no doubt a true momentum company.
A Levy is the
Momentum Stock Strategist for Zacks.com. He is also the Editor in
charge of the
Whisper Trader Service.