Actavis Beats on Q3 Earnings, Guides Above Expectations - Analyst Blog

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Actavis plc's ( ACT ) third quarter 2014 earnings came in at $3.19 per share, beating the Zacks Consensus Estimate of $3.12 per share and increasing 52.6% from the year-ago period.

Revenues for the reported quarter came in at $3.7 billion, up 83% from the year-ago period, beating the Zacks Consensus Estimate of $3.6 billion.

Results were boosted by the inclusion of products from the Forest Labs and Warner Chilcott acquisitions.

Quarterly Details

Actavis has three revenue producing segments -- North American Brands, North American Generics and International (generic, branded generic, brands outside North America and over-the-counter pharmaceutical products) and Anda Distribution.

North American Brands revenue soared to $1.6 billion (up significantly from $153 million in the year-ago period), driven by the Forest and Warner Chilcott acquisitions. Products like the Namenda franchise ($427.6 million), Bystolic ($138.6 million), Linzess ($80 million), Lo Loestrin Fe ($71.6 million), Estrace Cream ($66.7 million), Daliresp ($30 million) and Tudorza ($28.4 million) all performed well.

Actavis plans to stop selling Namenda IR in Jan 2015 provided it receives a favorable court ruling later this month.

CNS, gastroenterology, women's health, cardiovascular & respiratory, urology, anti-infectives and dermatology/established brands revenues came in at $554.6 million, $340.9 million, $241.5 million, $197 million, $73.5 million, $20.2 million and $191.6 million, respectively.

North American Generics revenues were $979.9 million. Generic Concerta and Lidoderm sales, however, were impacted by competition.

International revenues increased 15% from the year-ago period to $660.7 million benefiting from the Warner Chilcott and Forest acquisitions and strong growth in key markets including the UK and Russia/CIS.

Net revenues from the Anda Distribution segment increased 38% during the quarter to $423.2 million reflecting higher volume and new launches.

Ups Outlook for Second Half 2014

Actavis, which acquired Forest in Jul 2014, raised its outlook for the second half of the year. The company now expects to earn $6.60 - $6.70 per share on total net revenues of about $7.4 billion. Earlier, the company had guided towards earnings of $6.25 - $6.50 per share on total net revenues of about $7 billion.

Meanwhile, full year earnings are now expected in the range of $13.51 - $13.61 per share, well above the previously issued guidance range of $13.02 - $13.32 per share and the current Zacks Consensus Estimate of $13.33 per share.

Our Take

Actavis' third quarter results were once again strong with the company easily beating on the top- and bottom-line. Moreover, Actavis raised its outlook for 2014 significantly. The company will update its 2015 guidance and provide a pipeline review as well early next year.

We remain optimistic about Actavis' growth prospects. We are positive on the Forest acquisition which is in line with Actavis strategy of building its branded product portfolio. Meanwhile, the upcoming acquisition of Durata should boost Actavis' infectious disease portfolio. We are encouraged by Actavis' focus on building its branded and biosimilars pipeline.

Actavis is a Zacks Rank #2 (Buy) stock. Other equally well-ranked stocks in the health care sector include Mallinckrodt ( MNK ) and Teva ( TEVA ), both carrying a Zacks Rank #2. Meanwhile, a better-ranked stock is Mylan, Inc. ( MYL ) with a Zacks Rank #1 (Strong Buy).

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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 Nasdaq, Inc.

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

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