Tag Archives: endp

Generic Drug Stocks Crash, As Endo Warns Of Price Erosion

Drugmaker Endo International ( ENDP ) plunged 39% Friday after it delivered a hefty guidance cut driven by weakness in its generics business, dragging nearly every other generic-drug stock down with it. Endo actually beat analysts’ consensus in Q1, but it cut its full-year earnings guidance by 23% — now $4.50 to $4.80 a share — and trimmed the revenue outlook by 11% to a range of $3.87 billion to $4.03 billion. In the company’s earnings release, CEO Rajiv De Silva blamed “new competitive entrants, including for Voltaren Gel; greater-than-expected price erosion across the Generics sector; and delays on regulatory actions related to certain Endo products.” IBD’s Take: How healthy are shares of Endo and Teva and how do they stack up vs. rivals? Find out at IBD Stock Checkup It was the second factor that rattled the rest of the generics industry. Teva Pharmaceutical Industries ( TEVA ) stock fell 6.8% to 50.22, and hit a 19-month low of 50.01. Allergan ( AGN ), already staggering from the cancellation of its buyout by Pfizer ( PFE ), hit a two-year low of 195.50 and ended the day at 201.63, down 4.1%, even though it’s selling its generics business to Teva. Perrigo ( PRGO ), which cut its own guidance last month, fell 4.8%, to 92.42. Smaller drugmaker Akorn ( AKRX ), down as much as 20%, ended the day off 7.9%, at 22. Akorn, which has fallen way behind on its accounting due to internal issues, late Friday finally set dates for its Q4 and Q1 earnings releases, for May 9 and May 17, respectively. Leerink analyst Joseph Schwartz wrote in a research note that Endo’s problems read through most directly to Teva, Akorn and Perrigo, and more moderately to Allergan. Essentially, whoever’s done the most price-hiking on products representing more than 5% of generic sales lately is in the most trouble. Referring to industrywide data from IMS, Schwartz wrote: “Based on our analysis, Akorn has taken 13 price increases matching the above criteria (44% of IMS generic sales), Perrigo eight (18% of generic IMS sales) and Endo took 17 (17% of generic IMS sales).” Teva, meanwhile, is due to report its own Q1 earnings and guidance on Monday morning, and Allergan is due before the open the following day. Endo itself got at least four downgrades from Wall Street analysts Friday, mostly to neutral but one to underweight. It ended the day at 16.17, a seven-year closing low.

Medical Stocks Take Bloodbath; Valeant Creditors Demand New Terms

Disgraced drugmaker Valeant Pharmaceuticals ( VRX ) continued to sell off along with the rest of the medical sector Thursday as reports surfaced that creditors were demanding new terms as the company defaults on its massive debts. Reuters cited anonymous sources saying that in early talks, lenders were asking for higher interest payments and a pledge to pay a larger amount of the bank loans from the proceeds of any Valeant asset sales. Valeant has been in breach of its reporting covenant since Tuesday, when it missed its 10-K filing deadline, which it has 60 days to resolve. However, if it doesn’t file by March 30, it will also be in default with its bank creditors and will have only 30 days to resolve the default. Valeant is about $30 billion in debt after a years-long buying spree, culminating in a failed attempt to buy Allergan ( AGN ) last year. Allergan subsequently merged with Actavis and is now in the process of being bought by Pfizer ( PFE ). By late afternoon on the stock market today , Valeant stock lost 11.5% to 29.69. Medical groups tracked by IBD, even those unrelated to drugs, accounted for the seven worst performing groups out of IBD’s 197 industries. The generic drugs group led the slide with a 2.8% decline. The hardest-hit individual stocks were Valeant’s fellow specialty drugmakers, some of whom have consciously followed Valeant’s business model. Mallinckrodt ( MNK ) authorized a $350 million stock buyback but was down 4.1% to 53.42.   Endo International ( ENDP ), which is headed by former Valeant executive Rajiv De Silva, hit a three-year low of 27.62, trading down 11.4% to 30.03. Horizon Pharma ( HZNP ), which has been criticized for pricing policies much as Valeant has, was down 6.8% after selling off for the last three days. Among major drugmakers, Eli Lilly ( LLY ) tumbled 4.7%. Eli Lilly fell intraday to its lowest level since late 2014.

Valeant Loses Wall Street’s Confidence As Bad News Piles Up

Wall Street analysts gave scathing reviews to the management of Valeant Pharmaceuticals International ( VRX ) Wednesday, a day after a disastrous Q4 report and guidance cut the stock price in half. “We admit upfront, we have been humbled by our stock call on Valeant, which we have defended despite the continuing spate of bad news, as we believed that despite the noise surrounding the company, much of the fundamental businesses had been performing well,” wrote Nomura analyst Shibani Malhotra as she downgraded the stock to neutral from buy. “Despite the fact that our new PT (price target) for $60 represents 79.1% potential upside, we do not expect Valeant shares to outperform the market near term, as we have lost confidence in management’s ability to understand its own business and to provide reliable guidance.” Other analysts echoed the loss of confidence, including Canaccord Genuity’s Corey Davis, who cut the price target to 40 from 75 while maintaining a hold rating. “The weak guidance was likely the last straw for many investors, underscoring the numerous risks that we had highlighted in our recent downgrade,” Davis wrote in his research note. “Further, the threat of default on Valeant’s debt raises additional questions about what is behind the delayed 10-K filing.” Davis added that Valeant was unlikely to risk a credit default by missing its 10-K filing deadline if only a minor restatement of financials is in the works, raising the possibility that yet more bad news is coming. But Rodman & Renshaw analyst Raghuram Selvaraju wrote that a default seems unlikely. “We anticipate that the firm should be in a position to file its 10-K by April of this year and that its creditors would not invoke the cross-default clauses in Valeant’s debt agreements,” Selvaraju wrote in a research note. Selvaraju was one of the few left maintaining a buy rating on the stock, but he lowered his price target to 118 from 150. Jefferies analyst David Steinberg cut his price target in half, to 53, while TD Securities analyst Lennox Gibbs hacked his target to 45 from 110. Nonetheless, Valeant stock was rebounding in the stock market today , up 2.5%, above 34, in midday trading. So was Endo International ( ENDP ), whose stock tumbled 23% Tuesday likely because it’s headed by former Valeant executive Rajiv De Silva; it was up 8%, near 35, midday Wednesday. Specialty drug maker Mallinckrodt ( MNK ) continued to sink as Citron Research short seller Andrew Left, whose research helped blow open the Valeant scandal last year, continued the attacks on Mallinckrodt that he started in November, saying the company “ makes Valeant look like a bunch of choirboys .” Mallinckrodt stock was down 11% Wednesday after sliding 14.5% Tuesday.