Forest Laboratories Inc.
) to miss earnings expectations when it reports fourth-quarter
fiscal 2013 results on Apr 23, before the opening bell. Forest
Labs' fiscal year ends on Mar 31.
Why a Likely Negative Surprise?
Our proven model does not conclusively show that Forest Labs
is likely to beat earnings this quarter. That is because a stock
needs to have both a positive earnings Expected Surprise
Prediction (ESP) (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen.
Unfortunately this is not the case here as elaborated below.
Negative Zacks ESP:
This is because the Most Accurate estimate stands at 18 cents
while the Zacks Consensus Estimate is higher at 19 cents. This
results in a difference of -5.26%.
Zacks Rank #3 (Hold):
Forest Labs' Zacks Rank #3, however, complicates the predictive
power of ESP. This combined with a negative earnings ESP makes
Forest Labs an unlikely candidate for an earnings beat this
quarter. We caution against stocks with Zacks Ranks #4 and #5
(Sell rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revision
Factors at Play for 4Q
In the preceding quarter Forest Labs' results were hit by the
loss of exclusivity of Lexapro as well as the disappointing
performance of Namenda. We expect the company's results will
continue to be affected by generic competition for Lexapro and
the performance of Namenda, which is expected to face generic
competition in early 2015. Moreover, the performance of new
products, especially Teflaro, has been below expectations over
the last few quarters.
Stocks to Consider
Here are some companies you may want to consider as our model
shows they have the right combination of elements to post an
earnings beat this quarter:
Eli Lilly and Company
) has an Earnings ESP of +3.85% and holds a Zacks Rank #3
) has an Earnings ESP of +2.08% and carries a Zacks Rank #3
), has an Earnings ESP of +11.77% and carries a Zacks Rank #3
FOREST LABS A (FRX): Free Stock Analysis
GILEAD SCIENCES (GILD): Free Stock Analysis
LILLY ELI & CO (LLY): Free Stock Analysis
VIVUS INC (VVUS): Free Stock Analysis Report
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