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Why Is Endo (ENDP) Down 38.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for Endo International (ENDP - Free Report) . Shares have lost about 38.9% 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 drivers.

Endo Q1 Earnings & Revenues Beat Estimates

Endo reported better-than-expected results for first-quarter 2019.

The company’s earnings of 53 cents in the reported quarter easily beat the Zacks Consensus Estimate of 42 cents. However, earnings declined from 67 cents recorded in the year-ago quarter.

Revenues came in at $720.4 million in the quarter, surpassing the Zacks Consensus Estimate of $692.2 million and increasing 3% from the year-ago quarter’s figure. This increase was primarily attributable to continued strong growth in the U.S. Branded - Sterile Injectables segment and the Specialty Products portfolio of Branded Pharmaceuticals segment.

Quarterly Highlights

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

Branded Pharmaceuticals revenues were $204 million, up from $200 million in the first quarter due to continued strong growth in the Specialty Products portfolio, offset by ongoing generic competition in Established Products portfolio.

Specialty Products revenues increased 19% to $115 million in the quarter, primarily driven by the continued strong performance from Xiaflex. Sales of Xiaflex increased 20% to $69 million, driven by underlying volume growth in both the Peyronie's Disease and Dupuytren's Contracture indications.

Generic Pharmaceuticals recorded sales of $219 million in the quarter, down 12% due to competitive pressure in the generic business.

Sterile injectables revenues came in at $270 million, up 25% from the year-ago quarter, driven by strong growth of Adrenalin and Vasostrict.  In July 2018, the segment launched ertapenem injection, the authorized generic of Invanz, which boosted sales.

Endo has decided to terminate the previously-announced acquisition of Somerset Therapeutics, LLC, a New Jersey-based specialty pharmaceutical company, and the business of its India-based affiliate Wintac Limited, which operates as Somerset Therapeutics' contract developer and manufacturer. The decision was taken as certain regulatory approvals in India took longer than anticipated and the company lacks clarity on when those approvals could be received.

2019 Outlook

Endo expects revenues between $2.76 billion and $2.96 billion in 2019. The company expects Xiaflex’s full-year revenues to grow mid-to-high teens. The company anticipates earnings from continuing operations to be $2.00-$2.25 per share.


How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.32% due to these changes.

VGM Scores

Currently, Endo has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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


Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Endo has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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