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Endo (ENDP) Q1 Earnings: What's in Store for the Stock?

Endo International plc ENDP is scheduled to report first-quarter 2016 results on May 5, after the market closes. Last quarter, the company delivered a positive earnings surprise of 7.09%. Let’s see how things are shaping up for this announcement.

Factors Likely to Impact Q1 Results

In Mar 2016, Endo revealed weaker-than-expected first-quarter 2016 guidance at the Barclays Global Healthcare Conference. In the first quarter, Endo expects revenues in the range of approximately $928–$972 million. It anticipates earnings in the range of about $1.02 to $1.08 per share.

As far as Endo’s business segments are concerned, the company expects U.S. Branded Pharmaceuticals sales to decline in the first quarter of 2016 primarily due to expected seasonality. With the launch of Belbuca this February, investment in the product will more than offset the revenue. Though Xiaflex is projected to grow in double digits in 2016 on the back of marketing and DTC campaigns to increase physician and patient awareness, its sales in the first quarter could be impacted by seasonality and inventory fluctuations.

The company believes that erosion in its Generics base business continued in the first quarter of 2016 as well. In addition, the segment’s growth could be affected by the timing of select market events around key products in the generics portfolio.

On the other hand, seasonality and historical stocking fluctuations are expected to impact the International Pharmaceuticals segment. Unfavourable currency movement among other factors are also expected to impact the segment’s performance in the first quarter.

With the FDA approving a generic version of Voltaren Gel, all focus will be not only on the company’s first-quarter performance but also on the 2016 guidance.

Surprise History

Endo’s performance has been pretty good with earnings surpassing expectations in three of the last four quarters. Overall, the company has delivered an average positive surprise of 1.17%.
What Our Model Indicates

Our proven model does not conclusively show that Endo is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for Endo is 0.00% since the Most Accurate estimate stands in line with the Zacks Consensus Estimate of $1.05.

Zacks Rank: Endo currently carries a Zacks Rank #3, which when combined with an ESP of 0.00%, makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks That Warrant a Look

Here are a few other health care stocks that you may want to consider, as our model shows that they also have the right combination of elements to post an earnings beat this quarter:

Genocea Biosciences, Inc. GNCA has an Earnings ESP of +2.50% and a Zacks Rank #3. The company is scheduled to release first-quarter results on May 5.

The Earnings ESP for Impax Laboratories Inc. IPXL is +8.89% and it carries a Zacks Rank #3. The company is scheduled to release first-quarter results on May 10.

Jazz Pharmaceuticals plc JAZZ has an Earnings ESP of +4.58% and a Zacks Rank #3. The company is scheduled to release first-quarter results on May 10.

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ENDO INTL PLC (ENDP): Free Stock Analysis Report
 
JAZZ PHARMACEUT (JAZZ): Free Stock Analysis Report
 
GENOCEA BIOSCI (GNCA): Free Stock Analysis Report
 
IMPAX LABORATRS (IPXL): Free Stock Analysis Report
 
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