Actavis plc (ACT) announced it expects fourth quarter 2014 earnings to be 10%–15% above Wall Street consensus estimates. The Zacks Consensus Estimate currently stands at $3.51. The company’s expectation is based on a preliminary review of fourth quarter 2014 results.
Fourth Quarter 2014 Snapshot
During the quarter, the company witnessed strong sales growth in the U.S. and key international markets.
Actavis, which enjoys a strong position in the generic pharmaceutical market, submitted more than 40 abbreviated new drug applications (ANDAs) in the U.S. in 2014.
The branded segment pipeline also delivered with the FDA approving Namzaric – a fixed dose combination of Namenda extended release (XR) and Aricept (donepezil). Namzaric is approved for the treatment of moderate-to-severe dementia of the Alzheimer's type in patients stabilized on Namenda and Aricept.
Moreover, the FDA’s Advisory Committee voted in favor of approving the company’s experimental anti-infective Avycaz. The company is also seeking FDA approval for its antipsychotic, cariprazine.
We note that Actavis is looking to shift Namenda immediate-release (IR) patients to the new XR regimen ahead of the entry of generics expected to start Jul 2015. The company had earlier planned to stop selling Namenda IR from Jan 2015. However, the U.S. District Court for the Southern District of New York asked the company to continue selling Namenda IR. Actavis has appealed the court’s decision. A response is expected shortly.
Actavis has been on an acquisition mode over the last few years. In Nov 2014, Actavis acquired Durata Therapeutics. With this acquisition, Actavis has boosted its infectious disease portfolio through the addition of Dalvance.
Moreover, Actavis will be acquiring Botox maker Allergan (AGN) in a cash and stock transaction ($129.22 in cash and 0.3683 Actavis shares for each share of Allergan common stock) valued at about $66 billion or $219 per share. With this acquisition, Actavis, which was previously known for its strong presence in the generics market, will find itself in the company of the top 10 pharmaceutical companies across the world based on sales.
The company informed that the Allergan acquisition, which was earlier slated to close in the second quarter of 2015, is now anticipated to close late in the first quarter or early in the second quarter of 2015.
We believe Actavis will continue to exhibit impressive growth rates in 2015 driven by the potential approval and launch of generic as well as branded drugs. With the preliminary results being announced, we believe all eyes will now be on the upcoming Investor Day, scheduled for Feb 18, 2015.
Actavis currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Impax Laboratories Inc. (IPXL), Progenics Pharmaceuticals, Inc. (PGNX) and Allergan. All three carry a Zacks Rank #1 (Strong Buy).
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