Auxilium Pharmaceuticals, Inc.
) lowered its guidance for 2014. The company cuts its revenue
guidance by $70 million to $380 million−$420 million. The Zacks
Consensus Estimate of $483 million is significantly above the new
guidance range. This revision is primarily driven by
lower-than-expected Testim revenues.
Last year, Testim revenues were $211.2 million. However, in
2014, the company expects Testim revenues to be less than $85
million. In the first quarter of 2014, Testim revenues are
expected in the range of $11 million − $13 million.
Auxilium Pharma said that Testim will be affected by several
factors like a shrinking testosterone replacement therapy (TRT)
gel market, lower Testim market share, downward pressure on TRT
gel scrips due to concerns regarding safety, inventory
destocking, and higher rebates.
The company expects prescription volume in the TRT gel market
to go down by 25% in 2014 from the 2013 level.
While the company still expects gross margin in the range of
79% − 80%, R&D spend is now expected in the range of $40
million - $45 million (down by $10 million from the previous
guidance: $50 million - $55 million). SG&A expenditure,
however, remains unchanged in the range of $255 million - $265
Auxilium Pharma now expects to break-even or report a loss of
up to $15 million this year instead of reporting net income of
$45 million - $50 million.
Auxilium Pharma's guidance cut is disappointing. We expect
significant downward revisions in estimates given the company's
new guidance range. Although Auxilium has been working on
diversifying its revenue base, Testim still accounted for 52.7%
of the company's revenues in 2013. We expect shares to be
negatively impacted by the guidance cut.
AUXILIUM PHARMA (AUXL): Free Stock Analysis
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Auxilium Pharma carries a Zacks Rank #3 (Hold). Some
better-ranked stocks in the health care sector include
Enanta Pharmaceuticals, Inc.
WuXi PharmaTech (Cayman) Inc.
BioSpecifics Technologies Corp.
). While Enanta Pharma and WuXi Pharma hold a Zacks Rank #1
(Strong Buy), BioSpecifics carry a Zacks Rank #2 (Buy).