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Dr. Reddy's (RDY) Q4 Earnings Up Y/Y, Revenues Top Estimates

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Dr. Reddy's Laboratories Ltd. (RDY - Free Report) reported fourth-quarter fiscal 2019 earnings of 38 cents per share, up from 26 cents in the year-ago quarter, per American Depositary Share (ADS).

Moreover, revenues increased 14% year over year to $581 million. Revenues also surpassed the Zacks Consensus Estimate of $565 million.

Year to date, shares of the company have increased 4.5% against the industry’s decline of 2.9%.

 

Quarter in Detail

Dr. Reddy’s reported revenues under three segments — Global Generics, Pharmaceutical Services & Active Ingredients (“PSAI”), and Proprietary Products and Others.

Global Generics revenues were INR30.3 billion ($439.3 million), up 9% year over year in local currency during the fiscal fourth quarter. Growth was led by contributions from emerging markets and India, primarily due to volume gains, product launches and scaling up of new markets.

PSAI revenues were INR6.7 billion ($97.8 million), up 8% in local currency from the year-ago quarter.

Revenues at the Proprietary Products and Others segment came in at INR3 billion ($43.6 million), down 52% in local currency.

Further, research and development expenses were down 16% year over year to $53 million.

Selling, general and administrative expenses were $179 million, up 3% year over year.

As of Mar 31, 2019, Dr. Reddy’s had 110 generic filings (110 abbreviated New Drug Applications [ANDAs] and three new drug applications) that are pending FDA approval. Of these ANDAs, 60 were Para IV filings and 34 have first-to-file status.

Fiscal Full-Year 2019 Results

The companyreported full-year fiscal 2019 earnings of $1.64 per share, up from 85 cents in fiscal full-year 2018, per ADS.

Revenues increased 14% year over year to $581 million.

Our Take

In fourth-quarter fiscal 2019, Dr. Reddy’s top and bottom lines registered year-over-year growth. This was supported by significant growth in emerging markets and India, pickup in product launches, and improvements in cost structure.

However, the company expects to experience price erosion in the North America generics market. The European market is also witnessing high price erosion in some of the key molecules.

Dr. Reddy's Laboratories Ltd Price, Consensus and EPS Surprise

Dr. Reddy's Laboratories Ltd Price, Consensus and EPS Surprise

Dr. Reddy's Laboratories Ltd price-consensus-eps-surprise-chart | Dr. Reddy's Laboratories Ltd Quote

 

Zacks Rank & Stocks to Consider

Dr. Reddy’s has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the biotech sector are Anika Therapeutics Inc. (ANIK - Free Report) , Applied Genetics Technologies Corp. (AGTC - Free Report) and Axovant Sciences Ltd. (AXGT - Free Report) . All of them carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Anika’s earnings per share estimates have moved up from $1.22 to $1.28 for 2019 and from $1.21 to $1.33 for 2020 in the past 60 days. The company delivered a positive earnings surprise in the trailing four quarters, with average beat of 72.00%.         

Applied Genetics’ loss per share estimates have narrowed from $1.25 to 1 cent for 2019 and from $2.39 to $2.15 for 2020 in the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with average beat of 83.47%.         

Axovant’s loss per share estimates have narrowed from $9.76 to $9.42 for 2019 and from $7.97 to $7.00 for 2020 over the past 90 days.

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