Why Is Endo (ENDP) Up 12.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Endo International (ENDP). Shares have added about 12.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Endo due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Endo Q3 Earnings & Revenues Beat Estimates
Endo reported better-than-expected results for third-quarter 2019.
The company’s earnings of 60 cents in the reported quarter easily beat the Zacks Consensus Estimate of 53 cents. However, earnings declined from 71 cents in the year-ago quarter.
Revenues came in at $729.4 million in the quarter, surpassing the Zacks Consensus Estimate of $707.6 million but decreasing 2% from the year-ago quarter. The year-over-year decrease was primarily attributable to competitive pressure in the Generic Pharmaceuticals segment and the Established Products portfolio of the Branded Pharmaceuticals segment. Nevertheless, strong growth in the Sterile Injectables segment and the Specialty Products portfolio of the Branded Pharmaceuticals segment partially offset the decline.
Endo has four reportable business segments — Branded Pharmaceuticals, Generic Pharmaceuticals, Sterile Injectables and International Pharmaceuticals.
Branded Pharmaceuticals revenues were $217 million, down from $220 million in the year-ago quarter due to the ongoing generic competition in the Established Products portfolio. Specialty Products revenues increased 18% to $132 million, driven by the continued strong performance of Xiaflex. Sales of Xiaflex rose 29% to $83 million, owing to higher demand in Peyronie's Disease and Dupuytren's Contracture indications, driven by continued commercial execution and investment in promotional activities.
During the reported quarter, Endo submitted a Biologics License Application to the FDA for its Collagenase Clostridium Histolyticum product for the treatment of cellulite.
Sterile Injectables revenues came in at $264 million, up 11% year over year, driven by strong growth of Adrenalin, Vasostrict and Aplisol.
Generic Pharmaceuticals recorded sales of $218 million in the quarter, down 15% due to competitive pressure in the generic business. Nevertheless, the contribution of certain product launches including, colchicine tablets (the authorized generic of Colcrys) partially offset the decline.
International Pharmaceuticals revenues were $30 million, flat year over year.
Endo expects revenues between $2.86 billion and $2.89 billion for 2019 compared to the previous guidance of $2.76-$2.96 billion. The company anticipates earnings from continuing operations to be $2.10-$2.25 compared to the previous guidance of $2.00-$2.25 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -5.25% due to these changes.
At this time, Endo has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Endo has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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