Shire plc (SHPG) Tops Q1 EPS by 16c; Reaffirms FY16 Outlook, Offers Commentary

Shire plc (NASDAQ: SHPG) reported Q1 EPS of $3.19, $0.16 better than the analyst estimate of $3.03. Revenue for the quarter came in at $1.71 billion versus the consensus estimate of $1.71 billion.

OUTLOOK

We are off to a strong start in 2016 and reiterate our previously announced 2016 guidance. The guidance provided excludes the effect of the anticipated combination with Baxalta which is expected to close in June.

We continue to expect product sales to increase by 11% to 14% on a reported basis in 2016, and increase approximately 13% to 17% on a Non GAAP CER basis.

Royalties and other revenues are expected to increase by 5% to 10% in 2016, primarily from the benefit of a full year of the SENSIPAR royalty stream acquired as part of the NPS transaction and royalties acquired as part of the Dyax transaction.

Our Non GAAP gross margin is expected to be in line with 2015 (2015: 85.5%).

We expect our combined Non GAAP R&D and SG&A costs to increase in the 12% to 14% range as we absorb the operating costs associated with the Dyax transaction, make commercial investments to support our anticipated launch of lifitegrast in the second half of this year and progress our pipeline, particularly the programs in late-stage clinical development.

As a result of funding the Dyax transaction with a $5.6 billion term loan bank facility, we expect our Non GAAP net interest and other expense to increase by approximately 1.5 to 2 times 2015 levels (2015: $49 million).

For 2016, we expect our effective tax rate on Non GAAP income to be in the range of 16% to 18%.

For Non GAAP diluted earnings per ADS, we expect 2016 growth in the 7% to 10% range (9% to 13% on a Non GAAP CER basis).

For earnings history and earnings-related data on Shire plc (SHPG) click here.

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