Watson Pharmaceuticals Inc.
) third quarter 2012 earnings (excluding special items) of $1.35
per share surpassed the Zacks Consensus Estimate by 6 cents.
Earnings increased 23.9% from the year-ago period. Double-digit
revenue growth helped boost earnings.
Revenues for the reported quarter increased 18.8% to $1.29
billion, beating the Zacks Consensus Estimate of $1.27 billion.
All segments contributed to growth.
On a reported basis, Watson Pharma recorded earnings of 60
cents per share compared with earnings of 54 cents per share in
the year-ago period.
The company's Global Generics segment posted sales of $920.9
million, up 15%. The upside was driven by new product launches
including the generic versions of Xopenex,
) blood-thinner Lovenox, and
) Vancocin. International revenues were strong at $198.1
million, up 37%. International revenues were driven by the
January 2012 acquisition of Ascent and higher sales in important
markets like France, the UK and Canada.
Watson Pharma's Global Brands revenue came in at $121.3
million, up 10%. Increased contributions from products like
Rapaflo, Crinone and Generess Fe aided the performance of the
Net revenue for the Distribution segment increased 44% during
the quarter to $243.0 million due to increased third-party
product launches. This segment consists of only third-party
Actavis Acquisition Completed
Watson Pharma recently acquired Actavis Pharma for €4.25
billion. With this acquisition, Watson Pharma has become the
third largest generic pharmaceutical company in the world. The
company expects to generate annual cost (SG&A, R&D,
corporate, purchasing and raw material supply) synergy savings of
$300 million within three years.
Watson Pharma also announced its intention to adopt a new
global name - Actavis - from 2013. The company will start trading
under a new symbol on the New York Stock Exchange in 2013.
Watson Pharma provided its outlook for 2012 on a
post-acquisition basis (from November 1). The company expects to
earn $5.85 and $5.95 per share on revenues of about $5.9 billion.
The Zacks Consensus Estimate currently stands at $5.84 per share
on revenues of $5.6 billion.
The company also provided its outlook for 2013. Watson Pharma
expects 2013 earnings to increase 30-40% from the high end of the
2012 guidance range.
We currently have a Neutral recommendation on Watson Pharma,
which carries a Zacks #2 Rank (short-term 'Buy' rating). Watson
Pharma continues to perform well. We are positive on the Actavis
acquisition which will be immediately accretive to earnings.
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