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Endo (ENDP) Down 19.5% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Endo International (ENDP - Free Report) . Shares have lost about 19.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Endo due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Endo Q2 Earnings & Sales Beat

Endo reported earnings of 65 cents easily beat the Zacks Consensus Estimate of 35 cents in the reported quarter and rose from the year-ago quarter’s 60 cents.

Revenues came in at $687.6 million in the quarter, surpassing the Zacks Consensus Estimate of $638 million but decreasing 2% from the year-ago quarter. The decline was attributed to lower Branded Pharmaceuticals segment revenues due to reduced physician office activity and patient visits compared to the prior-year quarter because of the COVID-19 pandemic. The decrease was partially offset by an increase in Sterile Injectables segment revenues due to significant channel inventory stocking of products used to treat certain patients infected with COVID-19.

Quarterly Highlights

Endo has four reportable business segments — Branded Pharmaceuticals, Generic Pharmaceuticals, Sterile Injectables and International Pharmaceuticals.

Branded Pharmaceuticals revenues were $129.5 million, down 38% year over year due to reduced volumes caused by the COVID-19 pandemic.

Specialty Products revenues decreased 45% to $68.7 million. Sales of Xiaflex decreased 55% to $33.8 million as a result of physician office closures and a decline in patients electing to be treated because of the COVID-19 pandemic. Established Products revenues decreased 28% to $60.8 million due to competitive pressures and a temporary product supply disruption, which has been resolved.

Last month, the FDA approved QWO (collagenase clostridium histolyticum-aaes) for the treatment of moderate-to-severe cellulite in the buttocks of adult women. QWO is the first FDA-approved injectable treatment for cellulite and expected to be available throughout the United States beginning spring 2021.

Sterile Injectables revenues came in at $319 million, up 31% year over year, driven by significant channel inventory stocking of Vasostrict in anticipation of treating vasodilatory shock in patients infected with COVID-19.

Generic Pharmaceuticals reported sales of $216 million in the quarter, down 1% due to continued competitive pressures on certain key products, which were partially offset by recent product launches.

International Pharmaceuticals revenues came in at $23 million, down 20% year over year.

2020 Guidance

Revenues in the third quarter are projected to be $515-$550 million. Adjusted earnings per share are estimated to be 8-13 cents.

Revenues in 2020 are projected to be $2.60-$2.70 billion. Adjusted earnings per share are estimated to be $2-$2.15.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -71.43% due to these changes.

VGM Scores

Currently, Endo has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Endo has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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