Two Top Biotechs to Buy After Earnings

Two of my favorite biotech companies reported third-quarter results today, and they did not disappoint. If you haven’t already picked them up, both of these stocks are solid buys at current prices. Let’s take a look…

Actavis Plc (ACT) surpassed analysts’ sales and earnings expectations for the third quarter. The specialty pharmaceutical company reported a net loss of $1.04 billion, or $3.95 per share, compared with last year’s net income of $65.6 million, or $0.49 per share.

These results include costs from Actavis’ recent acquisition of Forest Laboratories for $25 billion. Excluding special items, adjusted earnings were $3.19 per share, topping the $3.10 consensus EPS estimate by 3%. Meanwhile, net revenue soared 83% year-on-year to $3.68 billion. Analysts were looking for $3.63 billion in revenue, so Actavis posted a 1.4% sales surprise.

And it appears that the best is yet to come: Actavis lifted its fiscal 2014 outlook. Actavis now expects adjusted earnings between $13.51 and $13.61 per share, up from the previous range of $13.02 to $13.32 EPS. This is also well above the Street view of $13.29 per share.

ACT is an A-rated Strong Buy in my Portfolio Grader screening tool.

Jazz Pharmaceuticals Plc (JAZZ) reported strong third-quarter results thanks to continued success with specialty drugs Xyrem, Erwinaze and Defitelio. Compared with the year ago quarter, revenues climbed 32% to $306.6 million, topping analysts’ estimates of $302.5 million in revenue.

Net income fell 66% year-on-year to $25.77 million, or $0.41 per share, due to a $75 million upfront payment for the rights to defibrotide in the Americas. Excluding special items, adjusted earnings jumped 30.9% year-on-year to $2.33 per share. This also trounced the $2.22 consensus EPS estimate by 10%.

Jazz Pharma also lifted its sales and earnings forecast for FY 2014. For the current year Jazz expects adjusted earnings in a range of $8.20 to $8.35 per share on revenues of $1.15 billion to $1.17 billion. Earlier, the company had expected adjusted earnings of $8.00 to $8.25 per share on revenues of $1.13 billion to $1.17 billion. The revised forecast is also above the Street view of $8.18 EPS on $1.16 billion in revenue.

JAZZ is an A-rated Strong Buy.

That’s all I have for you today, but earnings season isn’t over yet so I’ll be in touch on this daily blog with other market-moving updates.


Louis Navellier

Louis Navellier

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