Jazz Pharmaceuticals plc
) has beaten the Zacks Consensus Estimate in seven of the last
eight quarters with an average earnings surprise of 6.26%.
Moreover, the company generated year-over-year earnings growth of
79.2% in the first quarter of 2012. With a continued increase in
earnings estimates and a long-term growth projection of about
21.3%, this specialty biopharmaceutical stock became a Zacks #1
(Strong Buy) stock on May 31, 2012.
Positive Surprise in First Quarter
On May 8, Jazz Pharma reported first quarter 2012 earnings of 86
cents per share, soaring past the year-ago earnings of 48 cents and
topping the Zacks Consensus Estimate by a penny.
Revenues more than doubled to $108.4 million. This represents the
first combined financial results of the company following the
completion of its Azur Pharma merger on January 18, 2012.
First quarter results were driven by the strong performance of
narcolepsy product Xyrem, as well as contribution from the expanded
product portfolio resulting from the Azur Pharma merger.
Xyrem, the lead product at Jazz Pharma, should continue performing
well, driven by volume growth and price increases. A portfolio of
products with exclusivity, differentiation and high gross margins
gives the company strength to grow steadily. The acquisition of
EUSA Pharma in June 2012 adds another high opportunity product to
its portfolio - oncology product Erwinaze.
Guidance Up on First Quarter Results
Jazz Pharma increased both its 2012 revenue and earnings guidance
significantly following the strong first quarter results. The
company raised its sales guidance by $20 - $35 million to $500 -
$510 million, based on the strong performance of Xyrem. Meanwhile,
its earnings guidance was boosted by 25 cents to a new range of
$4.25 - $4.40 per share.
The company will be updating its guidance again when reporting its
second quarter results to include the impact of the EUSA Pharma
acquisition. The EUSA Pharma acquisition is expected to add $90 -
$100 million to 2012 revenues and boost earnings by about 25-30
cents per share.
Earnings Estimates on the Rise
Following the release of first quarter results, earnings estimates
moved up significantly over the last 60 days. The Zacks Consensus
Estimate for 2012 is up 14.8% to $4.35 per share, while the Zacks
Consensus Estimate for 2013 has increased 18.2% to $5.32 per share.
The implied earnings growth rate of more than 38% in 2012 should be
attractive for aggressive growth investors.
Jazz Pharma's valuation looks reasonable on a P/E and ROE basis.
Based on 2012 earnings estimates, the company is trading at a P/E
of 9.91x, a 12.1% discount to the peer group average of 11.11x.
Meanwhile, Jazz Pharma's ROE of 55.9% is higher than the peer group
average of 33.8%.
Given the long-term growth projection of 21.3%, the PEG ratio comes
in at 0.46, a 54% discount to the benchmark of 1 for a fairly
Although Jazz Pharma has witnessed some fluctuation in share price
over the last few quarters, the company had an impressive run over
the past three years. The price has shot up from $1.34 in January
2009 to $43.06 in June 2012.
The price and consensus chart shows that estimates have
consistently been on the rise with the stock price following the
movement of estimate revisions. With 2012 and 2013 estimates
increasing, the stock price should also keep increasing, in keeping
with the trend seen so far.
Jazz Pharma, which has a market cap of $2.44 billion, is a
specialty biopharmaceutical company that develops and
commercializes products that meet significant unmet needs in
specific disease areas. Marketed products include Xyrem
(narcolepsy), FazaClo/FazaClo HD (schizophrenia), Luvox CR
(obsessive compulsive disorder), Prialt (pain), and women's health
products like Elestrin (treatment of moderate to severe vasomotor
symptoms associated with menopause). The company, previously known
as Jazz Pharmaceuticals, Inc., was renamed Jazz Pharmaceuticals plc
following the January 2012 merger with Azur Pharma. Headquartered
in Dublin, Ireland, Jazz Pharma has operations in Palo Alto,
California and Philadelphia.
JAZZ PHARMACEUT (JAZZ): Free Stock Analysis
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