Biotech and pharmaceutical stocks were among the biggest losers in today’s market. While some companies, like GW Pharma, ended up surging, this was more to due to their exposure to the CBD/cannabis sector more than anything else.
Generic drug makers ended up tumbling on Tuesday, but the biggest loser was a small pharmaceutical stock despite modest Q2 results. Endo International (NASDAQ: ENDP) fell substantially over the course of the day, losing over one-fifth of its market cap so far.
While the decline follows the company’s recently announced Q2 figures, the financial figures weren’t as bad as one would assume from how much the stock has moved. Revenue fell by 2 percent to $699.7 million, which actually happens to e slightly ahead of expectations.
Net losses almost doubled to $98 million, while adjusted net income dropped by 30 percent to $120 million, or $0.52 per share. That last figure also happens to be ahead of what Wall Street was expecting, something closer to $0.47 per share.
“I am pleased with our second-quarter 2019 operating performance, led by continued year-over-year double-digit percentage growth in revenues of our Sterile Injectables segment and in the Specialty Products portfolio of our Branded Pharmaceuticalssegment. XIAFLEX® grew 18 percent in the quarter, reflecting continued demand growth as a result of successful commercial execution and promotional investment,” said Paul Campanelli, President and CEO of Endo according to a recent press release. “We are on target to meet our previously provided full-year financial guidance and remain highly focused on the continued execution of our multiyear turnaround plan in a challenging external environment.”
However, the company has been facing a tremendous amount of pressure from investors. Shares are trading hands for just barely over one times full-year adjusted EPS guidance, which is an extremely cheap figure for any company. That definitely doesn’t mean the stock is a buying opportunity, rather, it goes to show how little faith Wall Street has for the future of this company.
At the same time, pharmaceuticals in general were hard hit today following news from state legislators demanding a whopping $45 billion in settlements against opioid manufacturers. This also ended up hitting Endo International by association, which explains partially why the stock dropped so much on relatively mild news.
Shares of Endo International dropped by 22 percent over the course of the day, falling from $2.85 to $2.25. Nor has this company had much respite over the past six months. Shares have fallen significantly, declining over 78 percent since February where the stock used to trade in the $10 range. Back in November 2018, Endo was trading as high as $18.5 per share, with today’s price representing an 89 percent decline.
Overall, most experts are bearish on the stock, and short-sellers have smelled the blood in the water. While many would argue that this stock could be a good selling opportunity, having already lost so much of its value, it’s uncertain how much more room there is for the company to decline anymore at this point.
Endo International Company Profile
After a string of acquisitions and divestitures, Endo is a specialty pharmaceutical company with a considerable presence in pain management. The acquisitions of Auxilium and Par increased the company’s presence in urology and generics, respectively. – Warrior Trading News
