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Will Endo International's (ENDP) Q1 Earnings Disappoint? - Analyst Blog

Endo International, Inc.ENDP is scheduled to report its first-quarter 2015 results on May 11, 2015.

Endo's track record has been pretty impressive with the company beating estimates in all the last four quarters with an average earnings surprise of 11.53%. Last quarter, the company had posted a positive earnings surprise of 2.65%.

Let's see how things are shaping up for this announcement.

Factors at Play This Quarter

Endo's generic business in the U.S. continues to perform well and we expect the momentum to continue through the first quarter as well. Meanwhile, loss of exclusivity for Lidoderm and Opana ER is expected to continue to impact sales.

Last quarter, along with its fourth-quarter results, the company announced that it has entered into a definitive agreement with Boston Scientific BSX , which will acquire Endo's men's and prostate health businesses for up to $1.65 billion. The transaction is expected to close in the third quarter of 2015. Endo is also evaluating options for its women's health business. We expect to see more updates on the same.

We could also see updates related to the company's 2015 guidance. The company expects earnings per share for 2015 in the range of $4.35 to $4.55. The company expects revenues in the range of $2.90 billion to $3.00 billion.

Earnings Whispers?

Our proven model does not conclusively show that Endo is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.

Negative Zacks ESP: Endo has an earnings ESP of -3.7% as the Most Accurate estimate stands at $1.04 while the consensus estimate is pegged higher at $1.08. Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate.

Zacks Rank: Endo carries a Zacks Rank #3 (Hold). Though a favorable Zacks Rank increases the predictive power of the ESP, the company's -3.7% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

The Earnings ESP for Actavis ACT is +0.78% and it carries a Zacks Rank #3. The company is scheduled to release results on May 11.

Impax Laboratories Inc. IPXL has an Earnings ESP of +15.00% and carries a Zacks Rank #3. The company is scheduled to release results on May 11.

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BOSTON SCIENTIF (BSX): Free Stock Analysis Report

ENDO INTL PLC (ENDP): Free Stock Analysis Report

IMPAX LABORATRS (IPXL): Free Stock Analysis Report

ACTAVIS PLC (ACT): Free Stock Analysis Report

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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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