Mallinckrodt Beats Q1 Earnings, Ups View - Analyst Blog


Mallinckrodt plc 's ( MNK ) shares have been inching up (1.2% over two trading sessions) following the company's first quarter fiscal 2014 (ending Dec 2013) earnings report. Mallinckrodt reported adjusted earnings of 88 cents per share, beating the Zacks Consensus Estimate of 67 cents. Earnings were above the year-ago figure of 65 cents per share.

Net sales for the quarter were $540.2 million, up 7.2% from the year-ago quarter. Revenues were in line with the Zacks Consensus Estimate. Revenues were mainly driven by the performance of sales from the Specialty Pharmaceuticals segment.

Quarter in Details

Mallinckrodt reports revenues under two segments, Specialty Pharmaceuticals and Global Medical Imaging.

Sales from the Specialty Pharmaceuticals segment were $309.5 million in the reported quarter, up 18.9%. This segment comprises of two sub-segments, Brands and Generics and Active Pharmaceutical Ingredients (API). Net sales in Brands were $59.6 million, up 27.9%, mainly driven by Exalgo ($36.2 million). Net sales in Generics and API were $249.9 million, up 16.9%. This was driven by net sales of methylphenidate HCl extended-release tablets ($56.3 million). The company upped its fiscal 2014 guidance for methylphenidate HCl extended-release tablets to at least $150 million (old guidance: at least $120 million).

Net Specialty Pharmaceuticals sales are now expected in the range of $1.3 billion to $1.35 billion, up from the earlier guidance of $1.22 billion to $1.27 billion.

Sales from the Global Medical Imaging segment were $218.6 million in the reported quarter, down 4.8%. This segment includes Contrast Media and Delivery Systems (CMDS) as well as Nuclear Imaging sub segments. Net sales in CMDS were $111.6 million, down 8% due to pricing pressures. Net sales in the Nuclear Imaging segment were $107.0 million, down 1.2% due to rising costs and supply chain challenges.

Net Global Medical Imaging segment sales are now expected in the range of $850 million to $900 million, down from the earlier guidance of $885 million to $930 million.

In the first quarter fiscal 2014, research and development (R&D) expenses were $39.0 million, up 1.6% from the year-ago quarter.

Selling, general and administrative (SG&A) expenses remained flat at $146.2 million. Reduction in expenses through restructuring was offset by increased administrative costs.

Last month, Mallinckrodt's pain candidate, PENNSAID 2%, received FDA approval for the treatment of osteoarthritis-related pain of the knee. The company will launch the drug this week.

Pipeline Update

Mallinckrodt has several late-stage candidates in its pipeline. Xartemis XR, is under FDA review for the treatment of moderate to severe acute pain. A decision is expected by the end of this month. MNK-155 has completed a phase III study for moderate-to-moderately severe acute pain. A New Drug Application (NDA) application will be filed in expected in the second half of fiscal 2014.

Ups 2014 Outlook

Mallinckrodt increased its guidance for fiscal 2014. The company expects net sales in the range of $2.2 billion - $2.3 billion in fiscal 2014, up from the earlier guidance of R2.15 billion - $2.25 billion. The Zacks Consensus Estimate currently stands at $2.19 billion.

Adjusted earnings per share are expected in the range of $2.65 to $2.95 per share, up from the previous guidance range of $2.45 - $2.65 per share. The Zacks Consensus Estimate currently stands at $2.86 per share.

Mallinckrodt carries a Zacks Rank #2 (Buy). Some equally attractive stocks include Actavis plc ( ACT ) and AcelRx Pharmaceuticals, Inc. ( ACRX ). Meanwhile, a better ranked stock in the generics sector is Dr. Reddy's Laboratories Ltd. ( RDY ) with a Zacks Rank #1 (Strong Buy).

ACELRX PHARMACT (ACRX): Free Stock Analysis Report

ACTAVIS PLC (ACT): Free Stock Analysis Report

MALLINCKRODT PL (MNK): Free Stock Analysis Report

DOCTOR REDDYS (RDY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: API , ACRX , ACT , MNK , RDY

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