Following the release of fourth quarter and fiscal 2012 results,
most of the analysts covering
) have made downward revisions to their earnings estimates for
fiscal 2013. The downward revision in estimates is mainly in
response to the company's earnings guidance for fiscal 2013.
Fourth Quarter and Fiscal 2012 Quarter
Forest Labs reported earnings per share of 72 cents in the
fourth quarter of fiscal 2012, a penny above the Zacks Consensus
Estimate. Fourth quarter fiscal 2012 earnings, however, came in
below the year-earlier earnings of $1.12 per share. Results were
hit by the loss of exclusivity on Lexapro. Excluding
acquisition-related amortization, earnings came in at 78 cents.
Fourth quarter revenues declined 7.3% to $1.01 billion, with net
sales falling 8.7% to $996 million. Total revenues, however, topped
the Zacks Consensus Estimate of $980 million.
Full-year earnings came in at $3.72 per share, a penny above the
Zacks Consensus Estimate. Earnings, however, declined 15.6% from
the year-ago period. Revenues, which topped the Zacks Consensus
Estimate of $4.5 billion, increased 3.8% to $4.6 billion.
A detailed discussion of fourth quarter and fiscal 2012 results
is available here:
Forest Hit by Lexapro Generics
Agreement of Estimate Revisions
There is a significant negative bias in earnings estimate
revisions for Forest Labs for fiscal 2013. Following the release of
fourth quarter and fiscal 2012 results, 16 of the 19 analysts
following the stock lowered their estimates for fiscal 2013 with
only two analysts moving in the opposite direction.
However, where fiscal 2014 is concerned, 11 of the 24 analysts
following Forest Labs raised their estimates with 7 analysts moving
in the opposite direction.
Forest Labs expects fiscal 2013 earnings in the range of $0.90 -
$1.05 per share ($1.20 - $1.35 excluding acquisition-related
amortization) on total net revenue of $3.4 billion.
Magnitude of Revisions
Estimates for fiscal 2013 have gone down by 21 cents following
the release of fourth quarter and fiscal 2012 results. The current
Zacks Consensus Estimate of 95 cents is within Forest Labs'
guidance of $0.90 - $1.05 per share. Fiscal 2014 estimates are up 2
cents to $1.64 per share.
We currently have a Neutral recommendation on Forest Labs, which
carries a Zacks #3 Rank (short-term Hold rating). Forest Labs is
facing tough times with Lexapro losing patent protection.
We believe that Forest Labs will continue to seek in-licensing
and acquisition deals to grow its pipeline. We expect investor
focus to remain on the sales ramp of new products. Forest Labs will
be facing another patent cliff in early 2015 when Namenda will lose
patent protection, putting $1+ billion at risk.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
These "Earnings Estimate Scorecard" articles help analyze the
important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at
FOREST LABS A (FRX): Free Stock Analysis Report
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