Generic drugs are the sweet spot for drug manufacturers.
Par Pharmaceuticals Companies, Inc.
(
PRX
) recently reported first quarter results that surprised on the
Zacks Consensus by 12.3%. Even with shares soaring to 5-year highs,
this Zacks #1 Rank (Strong Buy) is once again a value stock, with a
forward P/E of just 10.5.
The New Jersey based pharmaceutical company has two divisions, Par
Pharmaceuticals and Strativa Pharmaceuticals. Par produces high
barrier-to-entry generics and Strativa makes proprietary drugs.
It has more than 50 currently marketed products in 85 prescription
drug families.
Par Beat In the First Quarter
On May 8, Par Pharmaceuticals reported its first quarter results
and surprised for the third time in fourth quarters. Earnings per
share were 82 cents compared to the consensus at 73 cents.
Revenue rose 7% to $271.5 million from $253.6 million a year ago.
Sales of its biggest product, Metoprolol, which is the authorized
generic for all strengths of AstraZeneca's Toprol XL, rose 9.6% to
$61.8 million from $56.4 million in the fourth quarter of 2011. The
increase was driven by customer buying patterns.
Expansion In India
On Feb 17, the company completed its acquisition of privately-held
Edict Pharmaceuticals Private Limited for $20.5 million at closing
and $4.4 million repayment of certain pre-close indebtedness.
The Chennai, India-based developer and manufacturer of solid oral
dosage generic drugs has a strong pipeline. It currently has 11
ANDAs filed with the FDA.
The Zacks Consensus Estimate For 2012 Jumped
The analysts are more bullish on 2012 than bearish after the first
quarter report. 6 estimates have moved higher and 1 lower in the
last 30 days.
The 2012 Zacks Consensus Estimate has risen to $3.89 from $3.72 in
that time.
That is earnings growth of 15% as the company made just $3.39 in
2011.
Shares Near 5 Year High
It's been a heck of a run for Par's shares since the Great
Recession in 2009. Shares recently touched new 5-year highs.
But Par remains a value stock.
In addition to a P/E of 10.5, it has a price-to-book ratio of 2.6.
A P/B ratio under 3.0 usually means a company has value. It is also
cheaper than its peers, which average a P/B of 1.8.
Par also has other solid fundamentals including a 1-year return on
equity of 20.3%.
With double digit earnings growth and a P/E under the average of
the S&P 500, this generic drug maker is a good combination of
growth and value.
Tracey Ryniec is the Value Stock Strategist for
Zacks.com
. She is also the Editor of the Turnaround Trader and Insider
Trader services. You can follow her on twitter at
@TraceyRyniec
.
PAR PHARMA COS (PRX): Free Stock Analysis
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