Shire plc (SHPG) Misses Q4 EPS by 10c, Offers Outlook

Shire plc (NASDAQ: SHPG) reported Q4 EPS of $2.63, $0.10 worse than the analyst estimate of $2.73. Revenue for the quarter came in at $1.58 billion versus the consensus estimate of $1.55 billion.

OUTLOOK

Following our delivery of record revenues and Non GAAP diluted earnings per ADS in 2014, we are positioning ourselves in 2015 to deliver further growth.

This outlook includes our preliminary assessment of the effect of the NPS Pharmaceuticals, Inc. ("NPS") acquisition, which we expect to close in the first quarter of 2015, subject to satisfaction of customary closing conditions.

On a Constant Exchange Rate basis we anticipate product sales growth in the mid-to-high single digits. When excluding the effect of INTUNIV product sales, we anticipate low double digit product sales growth on a CER basis.

Based on actual exchange rates(6) we anticipate low-to-mid single digit product sales growth in 2015. This rate of product sales growth is lower than we saw in 2014 as we compare against the initial year of CINRYZE product sales and expect significantly lower INTUNIV sales following its December 2014 loss of exclusivity. Additionally, we expect product sales growth in 2015 will be held back by approximately three to four percentage points by foreign exchange headwinds from the strengthening US dollar, which particularly impacts ELAPRASE, REPLAGAL and VPRIV sales.

Royalties and other revenues are expected to increase by 30-40% in 2015, as we include NPS's royalty streams for the first time.

Our Non GAAP gross margin is expected to be in line with 2014 (2014: 85.8%).

In 2015 we expect to continue seeing the benefit of our effective cost management, with underlying (excluding NPS) combined Non GAAP R&D and SG&A remaining flat compared with 2014. After including NPS's operating costs we anticipate combined Non GAAP R&D and SG&A to grow in the high single digits.

We expect our net interest and other expense to be in line with 2014 levels.

For 2015, we expect our effective tax rate on Non GAAP income to be in the range of 15-17%, before reverting to the 17-19% range in 2016 and beyond.

Taken together, we expect Non GAAP diluted earnings per ADS growth in the mid-single digits in 2015 (high single digit growth on a CER basis).

We remain confident of our ability to deliver our 10x20 organic growth aspirations, with additional upside from Lumena, Fibrotech, Bikam and NPS Pharma acquisitions.

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

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