Tough Times Ahead for Endo Health - Analyst Blog
January 04 2013 - 1:21PM
Zacks
Endo Health
Solutions (ENDP) recently issued a disappointing outlook
for 2013. The US-based diversified healthcare company expects
adjusted earnings per share for 2013 in the range of $4.40 -$4.70
per share. The guidance range is significantly below the Zacks
Consensus Estimate of $5.02 per share.
The company expects to end 2013
with revenues in the range of $2.80 - $2.95 billion, again below
the Zacks Consensus Estimate of $3.1 billion. We believe that the
entry of a generic competitor, Watson Pharma
(WPI), for Endo Health’s lead drug Lidoderm in September 2013 is
primarily responsible for the disappointing 2013 guidance.
Moreover, the 2013 outlook also assumes generic competition for
Endo Health’s key pain drug Opana ER. Consequently, Opana ER’s
sales for 2013 are expected to be 20% less on a year-over-year
basis.
We remind investors that Endo
Health had earlier forecasted 2013 adjusted earnings in the range
of $5.20-$5.40 per share on revenues of $3.0 - $3.2 billion. The
company withdrew the projection last month and issued the fresh
guidance in January 2013.
Apart from issuing 2013 outlook,
the company also maintained its view for 2012. The company
continues to expect adjusted earnings for 2012 at or below the low
end of the forecasted range of $5.00-$5.10 per share. The Zacks
Consensus Estimate for 2012 is currently pegged at $4.99 per share.
The company expects to unveil its financial results for fourth
quarter and full year 2012 by the end of next month.
We have a Neutral recommendation on
Endo Health. The stock carries a Zacks #3 Rank (Hold) in the short
run. Health care stocks that carry a Zacks #2 Rank (Buy) include
Allergan, Inc. (AGN).
ALLERGAN INC (AGN): Free Stock Analysis Report
ENDO PHARMACEUT (ENDP): Free Stock Analysis Report
WATSON PHARMA (WPI): Free Stock Analysis Report
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