Endo Health Solutions, Inc. (NASDAQ:ENDP)

I can't find a reason why a stock with earnings of $5/share annually has a price of barely over $30. On top of that the stock has lost nearly 20% of its value in the past 6mos. Endo has been on the upturn, however in the past week or so. I think this trend will probably continue, but maybe not at the current blistering rate of 5% per week. :-) There has been some talk about invetory levels at Endo. However, I think that the since there is a nearly parallel increase in raw materials and finished goods inventory, this is more likely an indication that management is ramping up inventory and raw materials for expected future demand. I don't think the increase in finished goods inventory is due to inventory just sitting around with no demans. So, I'm thumbing up Endo.

Endo's a fun stock even though their lack of an internal pipeline puts them outside of my developmental biopharma expertise. Over the last couple of years I've watched them grow rapidly through debt-fueled acquisitions. I don't know much about the long-term viability and risks of such a strategy, but Wall Street seems to have liked the approach. Lately, the stock has been off recent highs close to 40. The company has experienced several minor setbacks including manufacturing issues of Voltaren Gel and Opana ER that adversely impacted earnings, as well as a large legal payout to Impax, that has knocked the share price back below 30.

I'm betting that the current retrace is a temporary phenomenon and that Endo stock will resume its upward trajectory once the next quarterly revenues are in line with company guidance. Of course, if Europe implodes between now and then all bets are off in the short term.

Aggressive expansion into urology and generic drugs. Have been expanding with the purchase of smaller companies. Forward P/E of 5.5. Excellent stock price at this level.

The last patent for Lidoderm expires in 2014. Lidoderm is responsible for aroung 35% of current revenues, but more importantly, around 50% of gross profit.
Bracing itself for the Lidoderm's patent expiration, the management started a serious of acquisitions, most notably Qualitest in November 2010, for about 1.2 Billion. Qualitest is a generic drugs company. While this acquisition boosts revenues, it doesn't boost profits as much, since the generics is by nature an industry with lower margins.
Meanwhile, the company's debt went out of control, with net tangible assets of about -3.5 Billion.
In the post Lidoderm era, the companies profits are expected to decline, and this high debt may prove to be a problem.
If one of their current pipeline products will boom, Endo may thrive, but there can be no guarantee for such a scenario.
For now, Endo is a poor value play.

Narcotics will only become more envogue with healthcare reform. Not less. They have a good earnings yield and ROE. I am optimistic. Their products are heavily used in healthcare and they are expanding into generics as well.

Current Parameters
Rev. Growth Rate (last 3 Yrs)
5.00 - 3430.50
EPS Growth Rate (last 3 Yrs)
5.00 - 1121.10
Industry
Drugs
Active Picks
0.00 - 25889.00
CAPS Rating
5 - 5 on 2011-05-16

Value play.

Trading at forward P/E of 8.4 and PEG of 0.7.

Earnings up 36.5% over last year. Sales up 23% over last year. Beat earnings estimates by 2%. Profit margin 22%. ROE 23%. Worth $58.00. Trading at a 65% discount.

watch

Strong pain management drug franchise at a low valuation

Bioniche Life Sciences T.BNC is days from giving Endo Pharma a winning bladder cancer treatment out of PIIIa FDA SPA fast track and a MCC platform for multiple other interventions.

It is a story now but will be a chase the fire truck soon. Endo gave a webcast with Urocidin named as a big one.

For the walking worried patients who will be picked up by the new medical coverage in the US and a less toxic more succesful new generation solution which not only takes on the disease but turns on the patient immune sysytem to help fight and continue to do due diligence.

Good news story and gang buster investment opportunity.

They sell Percocet... what else do you need to know :)

It's cheap. It has a descent balance sheet. I think it could be a takeover target. I think it could be the greatest single idea IF healthcare reform IS passed! Why? Healthcare reform will cause a shortage of doctors. We won't be able to fix health issues, so we will mask health issues will pain medication! People will demand more pain meds. They will say, "my taxes are paying for medication, so I NEED more!" Guess what, they will get more!

Bought at $21.96 and gonna ride it out. I believe this stock will rebound nicely down the road (within 12 to 18 months). In no hurry to let it go.

Stock has been under performing the market this year and is trading at a 33% PE discount to the specialty pharma group. Last weeks analyst upgrade should push the price higher.

strong 5 year ROE& profit margin improvement and still at reasonable PE ratios

An aging population will require lots of pain management.

generic's are going to be a major part of reducing healthcare costs

PEG = 0.64