Endo Pharmaceuticals’ (ENDP) fourth quarter 2010 earnings (excluding special items) of $1.06 per share, surpassed the year-ago earnings by 25 cents and the Zacks Consensus Estimate by 10 cents. The impressive showing was attributable to the higher revenues reported in the final quarter of 2010.
Quarter in Details
Revenues climbed 31% to $511 million in the reported quarter. The revenue increase was attributable to impressive performances across all segments at Endo Pharma. Revenues easily surpassed the Zacks Consensus Estimate of $479 million.
The final quarter of 2010 witnessed a 9% rise in the sale of branded and non-promoted drugs to $395.2 million. The impressive showing by key products in pain, urology and oncology drove the increase. The sale of generic products at Endo Pharma jumped 125% to $65.5 million in the fourth quarter of 2010.
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.
Adjusted selling, general and administrative expenses declined 1.7% to $142.5 million driven by prudent cost management. Adjusted research & development expenses climbed 5% to $34.6 million in the final quarter of 2010.
Annual Results
For full year 2010, Endo Pharma earned $3.48 per share (up 23%). 2010 earnings surpassed the Zacks Consensus Estimate by 11 cents. Earnings were driven by higher revenues. Revenues climbed 17% to $1.72 billion in 2010 driven by impressive performances across all segments at Endo Pharma. 2010 revenues surpassed the Zacks Consensus Estimate of $1.7 billion.
2011 View Up
Apart from disclosing financial results, Endo Pharma provided guidance for 2011. Based on strong 2010 results the company has upped its projection for 2011.
Endo Pharma now expects to earn (on an adjusted basis) in the range of $4.20-$4.30 per share on revenues of $2.35-$2.45 billion, as opposed to the previously forecasted adjusted earnings range of $4.15 – $4.25 per share on revenues of $2.2 billion – $2.3 billion. The Zacks Consensus Estimate for 2011 hints at earnings of $4.22 per share on revenues of $2.27 billion.
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).
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