Endo (ENDP) Loses 35% in a Year: Can It Turn Around in 2018?


Shares of Endo International plc ENDP have tumbled 35.4% over a year against the industry’s gain of 7.1%.

Endo, a global specialty pharmaceutical company focused on branded and generic pharmaceuticals, came into existence following the acquisition of Paladin Labs. The company reports results under the following segments – U.S. Branded Pharmaceuticals, U.S. Generic Pharmaceuticals and International Pharmaceuticals.

Endo’s Branded segment continues to be under pressure due to additional competitive entrants as well as a continuous rise in the number of public policy and regulatory actions including the CDC guidelines related to opioid prescribing and use and divestiture of Strenda.  In March 2017, the FDA Drug Safety Risk Management and Anesthetic and Analgesic Drug Products Advisory Committees voted in the ratio of 18 to 8 and consented that reformulated Opana ER did not outweigh health risks. Few members stated that the benefits are now overshadowed by the continuing public health concerns around the product’s misuse, abuse and diversion. Thereafter, the FDA directed the company to remove the drug from the market in June 2017. The move comes in wake of the widespread opioid abuse epidemic. The drug represented 4% of total 2016 revenues.

Other companies like Mallinckrodt plc MNK are also under the scanner for the same. Endo recently announced that its subsidiary, Endo Pharmaceuticals Inc. (EPI), received a grand jury subpoena from the United States Attorney’s Office for the Southern District of Florida seeking documents and information relating to products containing opioid painkiller oxymorphone. Endo stated that the subpoena requests documents pertaining those produced in the past or pending lawsuits as well as those relating to product safety and efficacy, overdoses, diversion, thefts, overprescribing, abuse/misuse, dependency or tolerance, withdrawal, addictiveness, adverse events and manipulation along with many other documents.

The generic business is also under pressure due to intensifying consortium pricing pressure and additional competitive entrants along with product discontinuations as well as discrete factors, including destocking and shifts in purchase timing due to market conditions.

Hence, the company will have a tough 2018 as well.

Zacks Rank & Stocks to Consider

Endo currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the healthcare sector are Exelixis, Inc. EXEL and Sucampo Pharmaceuticals SCMP . While Exelixis sports a Zacks Rank #1 (Strong Buy), Sucampo carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

Exelixis’ earnings per share estimates have moved up from 72 cents to 73 cents for 2018 in the last 60 days. The company delivered a positive earnings surprise in the last four quarters, with an average of 572.92%.

Sucampo’s earnings per share estimates have moved up from $1.15 to $1.19 for 2018 in the last 60 days. The company delivered a positive earnings surprise in three of the last four quarters, with an average beat of 15.63%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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