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Guggenheim Remains Positive on Endo (ENDP) Following Par Pharma Deal; Sees Plenty of Room to Grow in Generics

May 18, 2015 2:17 PM EDT
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Price: $0.29 --0%

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    14 Buy, 15 Hold, 5 Sell

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Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Guggenheim affirms its Buy rating and $100 price target on Endo International plc (ENDP) following news that the company is moving to acquire Par Pharmaceuticals.

Analyst Swati Kumar sees room for growth in Endo/Par's addressable generics market. The analyst commented, According to ENDP's presentation, this market is estimated to be $90B in size, growing at 6% CAGR in which ENDP/Par only have 3% market share, which shows there is a lot of room to grow. Furthermore, the combined entities have more room for pricing leverage as well. ENDP has been aggressive in taking price increases in its controlled substance generic business and we see a lot of pricing opportunities for the momentum to continue in both the generic controlled substance and injectable segments, which are limited competition.

Kumar noted the following key takeaways from today's post-M&A conference call:

  1. Double-digit revenue growth, near to mid term; EPS expected to grow faster than revenues;
  2. ENDP to de-lever to 3-4x net debt to EBITDA in 12 to 18 months from high 4x to low 5x post close;
  3. Near-term PIV opps. includes Focalin 25/35 mg in 2015, Seroquel XR in Oct 2016, Zetia in Dec 2016;
  4. Gross margin to be accretive with room to improve in the long term; and
  5. Combined ANDA pipeline of 165 filed & 152 in development

For an analyst ratings summary and ratings history on Endo International plc click here. For more ratings news on Endo International plc click here.



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