Endo (ENDP) Beats Q2 Earnings & Sales, 2017 Guidance Lowered

Endo International plc’s (NASDAQ:ENDP) second-quarter 2017 earnings from continuing operations were 93 cents per share which topped the Zacks Consensus Estimate of 74 cents. In fact, the bottom line was also above the year-ago figure of 86 cents by 8%.

Revenues came in at $875.7 million in the quarter, surpassing the Zacks Consensus Estimate of $847 million. However, the top line was down 5% year over year as generic competition is adversely impacting the branded established products portfolio.

Shares of the company were up in pre-market trading following the release. But, we note that shares of Endo have underperformed the industry year to date. The stock has been down 45.8% against the industry’s gain of 1.4% during the same period.

Quarterly Highlights

Endoreports results through three segments – Branded Pharmaceuticals (U.S.), Generic Pharmaceuticals (U.S.) and International Pharmaceuticals.

U.S. Branded Pharmaceuticals sales were down 15% to $245.2 million, reflecting generic entry for Voltaren Gel, Opana ER and Lidoderm, and divestiture of Stendra. Voltaren Gel sales were down 26% year over year to approximately $20.3 million. Sales of pain products Lidoderm and Opana ER were down 57% and 18%, respectively. However, Xiaflex sales increased 18% year over year reflecting strong volume growth of the product.

U.S. Generic Pharmaceuticals recorded sales of $563.3 million in the quarter, marginally up 0.3% from the year-ago period as decline in the generics base business was significantly offset by launch of the generic version of neostigmine methylsulfate injection, along with the robust performance of sterile injectables. However, generics base business revenues declined approximately 34% due to increased competition and previously announced product discontinuances.

Notably, Endo's sold its South African subsidiary, Litha Healthcare Group to Acino Pharma (AG) in Jul 2017, which was completed last month. The company also announced that it will sell its Mexican subsidiary, Somar to Advent International. The transaction will close, in early fourth quarter.

The International Pharmaceuticals division garnered sales of $67 million, up 3.1% sequentially but was flat year over year.

2017 Outlook

Endo updated its financial guidance for 2017 to reflect Somar divestiture, withdrawal of Opana ER and manufacturing network restructuring.

Endo now lowered its revenue guidance in the range of $3.38 billion to $3.53 billion for 2017 compared to $3.45 billion to $3.60 billion, expected previously.

The company anticipates earnings from continuing operations in the range of $3.35 to $3.65 per share versus $3.45 to $3.75, projected earlier.

Moreover, the Zacks Consensus Estimate for earnings is pegged currently at $3.47 on revenues of $3.48 billion.

Zacks Rank & Stocks to Consider

Endo currently carries a Zacks Rank #4 (Sell). Some stocks worth considering in the pharma sector include Summit Therapeutics PLC (NASDAQ:SMMT) , Aduro Biotech, Inc. (NASDAQ:ADRO) and Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) . All the three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Summit’s loss estimates narrowed from $2.36 to 32 cents for 2017 over the last 30 days. The company delivered positive earnings surprise in each of the four trailing quarters with an average beat of 25.55%. Its share price is up 69% so far this year.

Alnylam’s loss estimates narrowed from $5.16 to $5.08 for 2017 over the last 30 days. The company came up with a positive earnings surprise in two of the four trailing quarters with an average beat of 3.69%. The stock is up 121.5% so far this year.

Aduro Biotech’s loss per share estimates narrowed from $1.46 to $1.36 for 2017 over the last 30 days. The company delivered positive surprises in two of the four trailing quarters with an average beat of 2.53%. The stock is up 7.4% so far this year.

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