Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

In this article, I will feature one drug manufacturer that has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increased their holdings by more than 10%.

Lannett Company (LCI) develops, manufactures, packages, markets, and distributes generic versions of branded pharmaceutical products in the United States.

(click to enlarge)

Insider buying during the last 30 days

Here is a table of Lannett's insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares PurchasedCurrent OwnershipIncrease In Shares
James MaherDirectorDec 175004,875 shares+11.4%
Kevin SmithVPDec 1310059,403 shares+0.2%
Martin GalvanCFODec 133,00029,500 shares+11.3%
Arthur BedrosianCEODec 135,000632,152 shares+0.8%

There have been 8,600 shares purchased by insiders during the last 30 days.

Insider buying by calendar month

Here is a table of Lannett's insider-trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
December 20138,6000
November 201300
October 201300
September 201300
August 201300
July 201300
June 201300
May 2013081,913
April 2013050,000
March 20131,00037,666
February 20134,00030,800
January 201300

There have been 13,600 shares purchased and there have been 200,379 shares sold by insiders this year. The month of December has seen the most insider buying.

Financials

Lannett reported the fiscal 2014 first-quarter, which ended September 30, financial results on November 7 with the following highlights:

Revenue$45.8 million
Adjusted net income$6.7 million
Net loss$6.0 million
Cash$45.8 million
Debt$6.4 million

(Source: December presentation)

Outlook

Lannett's fiscal 2014 guidance is as follows:

Net sales$245-$255 million
Gross margin57%-59%
R&D$27-$29 million

(Source: December presentation)

Lannett noted that its guidance for fiscal 2014 does not include the impact of the JSP contract extension, which resulted in the non-recurring pre-tax charge of $20.1 million recorded in the first quarter of fiscal 2014.

(Source: December presentation)

Pipeline and upcoming milestones

Lannett has currently 43 marketed products and 15 ANDAs pending regulatory approval.

(Source: December presentation)

Lannett is anticipating five product approvals in fiscal 2014.

(Source: December presentation)

Competition

Lannett's competitors include Actavis (ACT), and Mylan (MYL). Here is a table comparing these companies.

CompanyLCIACTMYL
Market Cap:1.07B28.76B16.28B
Employees:35617,70020,000
Qtrly Rev Growth (yoy):0.300.57-0.02
Revenue:161.59M7.65B6.82B
Gross Margin:0.400.490.44
EBITDA:30.77M1.67B1.86B
Operating Margin:0.150.120.19
Net Income:4.40M-574.00M605.44M
EPS:0.15-4.411.52
P/E:201.37N/A27.96
PEG (5 yr expected):0.880.791.26
P/S:6.633.762.39
Insider Ownership:19.30%0.40%0.10%

Lannett has the highest insider ownership among these three companies.

Here is a table of these competitors' insider-trading activities during the last 30 days.

CompanyInsider buying / sharesInsider selling / shares
ACT074,364
MYL5,000586,378

Only Lannett has seen intensive insider buying during the last 30 days.

Conclusion

There have been four different insiders buying Lannett and there have not been any insiders selling Lannett during the last 30 days. Two of these four insiders increased their holdings by more than 10%. Lannett has an insider ownership of 19.30%.

There are four analyst buy ratings, one neutral rating, and zero sell ratings with an average price target of $34.60. The 50-day moving average is currently at $26.76, which could be a good entry point for the stock based on the intensive insider buying.

(Source: December presentation)

Source: Lannett: 4 Different Insiders Have Purchased Shares This Month