Endo Pharma Q1 Result Matches Est. - Analyst Blog

Endo Pharmaceuticals' (ENDP) first quarter 2011 earnings (excluding special items) of $1.00 per share, surpassed the year-ago earnings by 26 cents. Earnings were in-line with the Zacks Consensus Estimate. The year over year rise in earnings was attributable to the higher revenues reported in the first quarter of 2011.

Quarter in Details

Revenues climbed 54% to $560 million in the reported quarter. The revenue increase was attributable to impressive performances across all segments at Endo Pharma. Revenues were in-line with the Zacks Consensus Estimate.

The first quarter of 2011 witnessed an 11% rise in the sale of branded and non-promoted drugs to $375 million. The impressive showing by key products in the pain, urology and oncology divisions drove the increase. The sale of generic products at Endo Pharma jumped 419% to $134.4 million in the first quarter of 2011.

Revenues from the segment were aided by the inclusion of results from Qualitest Pharmaceuticals (a generic company). We remind investors that Qualitest Pharmaceuticals was purchased by Endo Pharma late last year for $1.2 billion in cash.

Revenues from devices and services accounted for the balance in the reported quarter. The entire revenues from the segment came from HealthTronics, which was acquired by Endo Pharma in July 2010.

We note that Endo Pharma is on an acquisition spree to expand its business. The company completed three acquisitions in 2010 and signed an agreement to acquire American Medical Systems (AMMD), a leading pelvic-health devices provider.  The deal is expected to close in the third quarter of 2011.

2011 View Backed

Following the release of first quarter results, Endo Pharma maintained its 2011 revenue and adjusted earnings guidance (on a standalone basis). The company expects to earn in the range of $4.20-$4.30 per share on revenues of $2.35-$2.45 billion. We believe Endo Pharma, with its strong portfolio and continuous efforts to expand and diversify its business, will easily achieve the guidance. The Zacks Consensus Earnings Estimate for 2011 is above the guidance range provided by the company and hints at earnings of $4.33 per share. The Zacks Consensus Revenue Estimate reflects 2011 revenues of $2.36 billion for Endo Pharma.

Our Recommendation

Currently, we have a Neutral stance on Endo Pharma in the long-run, which is supported by the Zacks #3 Rank (short-term Hold recommendation).