We recently maintained our Neutral recommendation on
). Our target price is $21.00 per share.
Warner Chilcott's first quarter 2013 earnings (excluding
special items) of 92 cents per share beat the Zacks Consensus
Estimate of 85 cents. Lower selling, general & administrative
costs boosted earnings in the reported quarter. The company
earned $1.16 per share in the first quarter of 2012.
Revenues in the first quarter of 2013 declined 13.4% to $593
million. The decline was primarily attributable to lower sales of
its osteoporosis drug, Actonel due to generic competition.
Moreover, reduced sales of dermatological product Doryx and
gastroenterology product Asacol hurt revenues in the first
quarter of 2013. Revenues, however, beat the Zacks Consensus
Estimate of $589 million.
Warner Chilcott will be acquired by
) by year-end. The successful completion of the deal will create
a leading global specialty pharmaceutical company with combined
annual revenues of about $11 billion.
We believe that the creation of the combined entity will be
beneficial for Warner Chilcott, which is facing declining
revenues as a standalone entity due to genericization of key
drugs. We see limited upside from current levels and hence retain
our Neutral stance on the stock.
Stocks That Warrant a Look
While we expect Warner Chilcott to perform in line with its
peers and industry levels in the coming months and advice
investors to wait for a better entry point before accumulating
shares, one can look at
Auxilium Pharmaceuticals Inc.
) as a good buying opportunity. The stock carries a Zacks Rank #2
(Buy). Another favorably placed company is
Jazz Pharmaceuticals Public Limited Company
) with a Zacks Rank #1 (Strong Buy).
ACTAVIS INC (ACT): Free Stock Analysis Report
AUXILIUM PHARMA (AUXL): Free Stock Analysis
JAZZ PHARMACEUT (JAZZ): Free Stock Analysis
WARNER CHIL PLC (WCRX): Free Stock Analysis
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