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Bull of the Day: Impax (IPXL)

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About the Company

Headquartered in Hayward, CA, Impax Laboratories (IPXL) is a technology-based specialty pharmaceutical company. The company has a balanced business model targeting sustainable generic and specialized brand markets.

Third Quarter Earnings and Updated Guidance

The company reported third quarter 2013 adjusted net income of $16.6 million, or $0.25 per diluted share, compared to adjusted net income of $33.0 million, or $0.48 per diluted share in the prior year period. Earnings were significantly better than the Zacks Consensus Estimate of a loss of $0.06 per share.

Total revenues for the quarter were $132.6 million, down 8.9% year over year, but well ahead of the Zacks Consensus Estimate of $109 million. Global Pharmaceuticals revenues increased due to sales of new generic products launched this year, partially offset by lower sales of attention deficit hyperactivity disorder product, Adderall XR.

Revenues from the Pharmaceuticals division were down 61.8% year over year, hurt by lower demand for Zomig tablets and ZMT products due to generic competition. The balance sheet position remained strong balance sheet with approximately $437 million in cash and cash equivalents and no debt.

The company increased their full year gross margin guidance to approximately 50% from its prior guidance of mid- to upper 40% range.

Rising Estimates

After better than expected results analysts have increased their estimates for the company. The Zacks Consensus Estimate for IPXL for the current quarter and the current year now stand at ($0.02) and $0.75 per share respectively up from ($0.17) and $0.41 per share, 30 days ago.

The company has beaten Zacks Consensus Estimates in all last four quarters, with an average positive surprise of 275.6%.

Well-Positioned for Future Growth

Impax is currently focused on diversifying its generic business product mix and building a branded business pipeline. The company has a diversified currently marketed portfolio of 47 products and 69 future opportunities pending at FDA or under development.

In the brand name, Impax’s focus is on internally developing Central Nervous System (CNS) disorder products in order to deliver meaningful patient benefits and develop strong intellectual property positions. In addition, they continue to search for external growth opportunities through partnerships and M&A in the CNS and psychiatry areas.

The Bottom Line

Impax has a Zacks Rank of 1 (Strong Buy) and an Outperform recommendation. Further, Zacks Industry rank of 48 (out of 265) also indicates the likelihood of outperformance in the near to mid term.

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