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Analyst Blog

Endo International plc’s (ENDP - Free Report) third-quarter 2016 earnings of $1.01 per share were significantly above the Zacks Consensus Estimate of 81 cents. However, reported earnings slipped 1% from the year-ago figure. The company's shares were up around 7% in the pre-market trading.

Revenues came in at $884.3 million in the third quarter of 2016, up 19% year over year mainly driven by contributions from the Sep 2015 Par Pharmaceutical acquisition. Revenues were also above the Zacks Consensus Estimate of $867 million.

Quarterly Highlights

The company reports results through three segments – Branded Pharmaceuticals (U.S.), Generic Pharmaceuticals (U.S.) and International Pharmaceuticals.

U.S. Branded Pharmaceuticals sales were down 8% to $280 million, reflecting generic entry for Voltaren Gel in Mar 2016 and reduction in volume across its established pain products.

Voltaren Gel sales plunged 61% year over year to approximately $19 million. Sales of pain products Lidoderm and Opana ER were down 34% and 13%, respectively.

However, Xiaflex sales increased 19% year over year reflecting high single-digit demand growth for the product.

U.S. Generic Pharmaceuticals recorded sales of $534 million in the quarter, up 45% from the year-ago period. Addition of products through the Par Pharma acquisition led to the increase in segmental sales. Segment revenues also benefited from the robust performance of sterile injectables.

However, Generics base business revenues declined approximately 20% sequentially due to deepening consortium pricing pressures, and additional competitive entrants and product discontinuations as well as discrete factors, including destocking and shifts in purchase timing due to market conditions. The company expects these discrete factors and a steeper decline to continue into 2017.

The International Pharmaceuticals division garnered sales of $71 million, down 3% year over year and approximately 6% sequentially.

Paladin revenues increased 10% to $28 million reflecting strong performance across the base business and the Canadian launch of Nucynta among other factors. Revenues of Litha and Somar in the emerging markets declined 4% from the year-ago period to $38 million. The decrease was mainly due to the decline in Litha revenues which resulted from the recent divestiture of non-core assets and the integration of a new portfolio of products and pipeline programs acquired from Aspen.

2016 Outlook Reiterated

Endo has reiterated its outlook for 2016. The company continues to expect revenues in the range of $3.87 billion to $4.03 billion. It still expects earnings in the range of $4.50 to $4.80 per share. The Zacks Consensus Estimate for 2016 earnings is pegged at $4.55 on revenues of $3.91 billion.

Adjusted gross margin is expected to be approximately 60%.

ENDO INTL PLC Price, Consensus and EPS Surprise

 

Zacks Rank & Stocks to Consider

Endo is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the health care sector include Exelixis, Inc. (EXEL - Free Report) , Infinity Pharmaceuticals, Inc. (INFI - Free Report) and Anika Therapeutics Inc. (ANIK - Free Report) . While Infinity and Anika sport a Zacks Rank #1 (Strong Buy), Exelixis has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Infinity’s loss estimates narrowed from $3.84 to $3.79 for 2016 and from 87 cents to 86 cents for 2017 over the last 60 days. The company has posted a positive surprise in all of the four trailing quarters with an average beat of 67.62%.

Anika’s earnings estimates increased from $1.96 to $2.06 for 2016 and from $2.03 to $2.09 for 2017 over the last 60 days. The company has posted a positive surprise in all of the four trailing quarters with an average beat of 33.14%. Its share price has gained 16% year to date.

Exelixis’ loss estimates narrowed from 71 cents to 59 cents for 2016 and from a loss of 16 cents to earnings of a penny for 2017 over the last 60 days. The company has posted a positive surprise twice in the trailing four quarters with an average beat of 38.52%. Its share price has skyrocketed above 100% year to date.

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