) is scheduled to report first quarter 2014 results before the
opening bell on Apr 30.
Last quarter, Actavis had posted an earnings surprise of +3.59%.
We expect the company to beat expectations in the first quarter
Why a Likely Positive Surprise?
Our proven model shows that Actavis is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
(Expected Surprise Prediction), which represents the difference
between the Most Accurate estimate and the Zacks Consensus
Estimate, is +3.34%. This is a very meaningful and leading
indicator of a likely positive earnings surprise.
Zacks #2 Rank (Buy):
Note that stocks with Zacks Rank #1, #2 and #3 have a
significantly higher chance of beating earnings estimates. 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 momentum.
The combination of Actavis' Zacks Rank #2 (Buy) and an earnings
ESP of +3.34% make us confident of an earnings beat on Apr 30.
What is Driving Better-than-Expected Earnings?
Although Actavis' generic version of Concerta will continue to
face competition from new entrants in the attention deficit
hyperactivity disorder (ADHD) market, generic versions of
Lidoderm, Cymbalta and Suboxone should perform well. Strong
performance by branded products like Rapaflo and Generess Fe
should boost revenues. The top-line should benefit from the
Warner Chilcott acquisition.
Apart from working on driving generic product sales, Actavis is
focusing on strengthening its branded product portfolio. In Feb
2014, Actavis announced its intention to acquire
Forest Laboratories Inc.
) for a cash and equity transaction of about $25 billion. The
deal is slated to close in mid-2014.
Other Stocks to Consider
Actavis is not the only company looking up this earnings
season. We also see likely earnings beats coming from these
companies in the medical sector:
Teva Pharmaceutical Industries Ltd.
) has an Earnings ESP of +0.82% and holds a Zacks Rank #2. Teva
will report first quarter earnings on May 1.
Vertex Pharmaceuticals Inc.
) has an Earnings ESP of +5.63% and holds a Zacks Rank #2. Vertex
Pharma will report first quarter earnings on May 1.
ACTAVIS PLC (ACT): Free Stock Analysis Report
FOREST LABS A (FRX): Free Stock Analysis
TEVA PHARM ADR (TEVA): Free Stock Analysis
VERTEX PHARM (VRTX): Free Stock Analysis
To read this article on Zacks.com click here.