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Forest Laboratories, Inc. (FRX) develops, manufactures, and sells branded forms of ethical drug products primarily in the United States and Europe. It principally offers Namenda for the treatment of moderate and severe Alzheimer's disease; Bystolic for the treatment of hypertension; Savella for the management of fibromyalgia; Teflaro for the treatment of adults with skin and skin structure infections, and community-acquired bacterial pneumonia; Daliresp to reduce the risk of chronic obstructive pulmonary disease (COPD) exacerbations in patients with severe COPD; and Viibryd for the treatment of adults with major depressive disorder (MDD).

It is scheduled to report its Q1 2013 results on July 17, 2012, before the market opens. In this article I will recap the historical results of the company, latest EPS estimates vs. surprises, latest developments and closest competitors' development.

Technical Overview


The stock has a market capitalization of $9.43B and is currently trading at $35.48 with a 52 week range of $28.47 - $39.50. The stock performance year to date: 17.25%. It is currently trading above 20, 50 and 200 SMA.

Key Metrics

  • Trailing P/E: 9.94
  • Forward P/E: 21.63
  • Price/Sales: 2.06
  • Price/Book: 1.66
  • PEG Ratio: 1.36
  • Total Debt: 0.00
  • Annual dividend yield: N/A
  • Return on Equity: 17.52%
  • Return on Assets: 10.56%

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last two quarters. In the last quarter it reported $0.72 EPS, beating analyst estimates of $0.70.

The consensus EPS estimate is $0.27 based on 23 analysts' estimates, down from $1.04 a year ago. Revenue estimates are $819.63M, down from $1.15B a year ago. The median target price by analysts for the stock is $37.50.

Average recommendation: Hold

Source: Marketwatch

Analyst Upgrades and Downgrades

  • On April 25, 2012, Auriga initiated Hold rating for the company.
  • On April 18, 2012, Cantor Fitzgerald reiterated Buy rating for the company.

Latest Developments

  • On July 5, 2012, Sanford Wittels & Heisler, LLP, announced that it has filed a $100 million gender discrimination lawsuit against New York-based Forest Laboratories, Inc. and Forest Pharmaceuticals, Inc., in the U.S. District Court for the Southern District of New York.
  • On June 11, 2012, Forest Laboratories Inc revised fiscal 2013 earnings guidance. Following the expiration of Lexapro's patent exclusivity in March 2012, rapidly evolving and unanticipated conditions in the Lexapro / escitalopram market necessitate revisions to the Company's previous forecasts for both branded Lexapro sales and royalty income earned on sales of the escitalopram authorized generic, distributed by an independent third party.
  • On April 26, 2012, Forest Laboratories Inc and Pierre Fabre Medicament announced additional positive results from a Phase III clinical trial of levomilnacipran, an investigational agent for the treatment of adults with depressive disorder .
  • On April 23, 2012, Ironwood Pharmaceuticals Inc and Forest Laboratories, Inc. announced that the U.S. Food and Drug Administration (FDA) notified the companies that it will require a three-month extension to complete its review of the data supporting the New Drug Application (NDA) for linaclotide for the treatment of irritable bowel syndrome with constipation (IBS-C) and chronic constipation (CC).
  • On April 17, 2012, Forest Laboratories, Inc. announced that for fiscal 2013, it expects diluted earnings per share (EPS) to be in a range of $0.90 to $1.05 including acquisition related amortization, the estimated impact of increased investments for marketing to support the new product launches of aclidinium and linaclotide which expect to launch during the fourth calendar quarter of 2012, the continued launches of Teflaro, Daliresp and Viibryd and research and development to support the ongoing progress of late stage product development pipeline.
  • On April 2, 2012, Forest Laboratories, Inc. announced that Forest Laboratories Holdings Limited (Forest), its wholly owned subsidiary, and Janssen Pharmaceutica NV (Janssen) entered into an agreement under which Forest acquired all U.S. patents and other U.S. and Canadian intellectual property for Bystolic (nebivolol), which is currently approved in the United States for the treatment of hypertension, thereby eliminating all future royalties.
  • On March 29, 2012, Reuters reported that Forest Laboratories, Inc. and Almirall, S.A. said a U.S. regulator has extended the review period for their inhaled drug that could be used to treat a certain type of lung disease.
  • On March 15, 2012, Reuters reported that Mylan Inc has pulled out of talks to buy a stake in Italian pharmaceuticals firm Rottapharm. The Rovati family had been looking to find an investor among pharma groups such as Mylan, Forest Laboratories, Inc. and Watson Pharmaceuticals, Inc., after it failed to sell a minority stake to private equity houses.
  • On March 14, 2012, Forest Laboratories, Inc. and Forest Laboratories Holdings, Ltd. (collectively, Forest) announced that Forest and Janssen Pharmaceutica NV have jointly filed a lawsuit in the U.S. District Court for the District of Delaware against several companies for infringement of U.S. Patent No. 6,545,040 (040 patent), relating to Forest's BYSTOLIC product.
  • On March 7, 2012, Forest Laboratories, Inc. and Pierre Fabre Medicament announced positive top-line results in a Phase III clinical trial of levomilnacipran, an investigational agent for treatment of adults with depressive disorder .
  • On February 28, 2012, Forest Laboratories, Inc. and Gedeon Richter Plc. announced positive top-line results in 2 Phase III clinical trials of cariprazine (RGH-188) for the treatment of acute exacerbation of schizophrenia.
  • On February 24, 2012, Forest Laboratories, Inc. and Almirall, S.A. announced that the U.S. Food and Drug Administration's (FDA) Pulmonary-Allergy Drugs Advisory Committee (PADAC) voted 12 to 2 in favor of approving the New Drug Application (NDA) for aclidinium bromide, a new long-acting antimuscarinic for the maintenance treatment of COPD.
  • On February 8, 2012, Forest Laboratories, Inc. and Gedeon Richter Plc. announced preliminary top-line results from a Phase III clinical trial of cariprazine (RGH-188), an investigational antipsychotic agent, in patients with acute mania associated with bipolar I disorder.
  • On January 17, 2012, Forest Laboratories, Inc. announced that for fiscal 2012, it expects diluted earnings per share to be in the range of $3.65 to $3.75.

Competitors

Forest Laboratories Inc. operates in Drug Manufacturers - Other industry. The company could be compared to Celgene Corporation (CELG), Elan Corporation, plc (ELN), GlaxoSmithKline plc (GSK), Eli Lilly & Co. (LLY), and Pfizer Inc. (PFE). Below is the table comparison of the most important ratios between these companies and the industry.

Competitors' Latest Development

  • On July 7, 2012, Eli Lilly And Co and Bristol-Myers Squibb Coannounced that ERBITUX (cetuximab) in combination with the chemotherapy regimen FOLFIRI (irinotecan, 5-fluorouracil, leucovorin) has been granted full approval by the U.S. Food and Drug Administration (FDA) for the first-line treatment of patients with KRAS mutation-negative (commonly known as KRAS wild-type), epidermal growth factor receptor (EGFR)-expressing metastatic colorectal cancer (mCRC) as determined by FDA-approved tests for this use. ERBITUX is not indicated for the treatment of KRAS mutation-positive colorectal cancer.
  • On July 6, 2012, Reuters reported that Five big U.S. retailers filed an antitrust lawsuit against Pfizer Inc and India's Ranbaxy Laboratories Ltd, accusing them of conspiring to delay sales of generic versions of Lipitor.
  • On July 4, 2012, Reuters reported that Nestle SA has signed a $8.5 billion syndicated bridge loan to back its $11.85 billion takeover of Pfizer, Inc.'s infant nutrition business.
  • On July 2, 2012, Glaxosmithkline Plc and Theravance, Inc. announced the results of four pivotal phase III studies of investigational LAMA/LABA involving over 4,000 patients with chronic obstructive pulmonary disease (COPD).
  • On July 2, 2012, GlaxoSmithKline plc announced that it has reached an agreement with the US Government, multiple states and the District of Columbia to conclude GSK's most significant ongoing Federal government investigations.
  • On June 29, 2012, Human Genome Sciences Inc (HGSI) announced statement regarding the extension by GlaxoSmithKline plc of unsolicited tender offer to acquire all the outstanding common shares of HGS at a price of $13.00 per share in cash and GSK's statement that approximately 375,526 shares of HGS common stock have been tendered into their offer.
  • On June 29, 2012, Glaxosmithkline Plc announced it has extended its tender offer to acquire all of the outstanding shares of Human Genome Sciences for USD13.00 per share in cash to 5:00 p.m New York City time on July 20, 2012.
  • On June 29, 2012, Pfizer Inc announced that its Board of Directors declared a $0.22 third-quarter 2012 dividend on the Company`s common stock, payable September 5, 2012, to shareholders of record at the close of business on August 3, 2012.
  • On June 28, 2012, Reuters reported that Nestle SA has been talking to banks about raising a new EUR7 billion ($8.7 billion) syndicated loan to help fund its $11.85 billion takeover of Pfizer, Inc.'s Nutrition.
  • On June 28, 2012, Breckenridge Pharmaceutical, Inc. announced that Breckenridge and Alembic Pharmaceuticals Limited were named codefendants in a Paragraph IV lawsuit filed by Pfizer Inc. concerning their ANDA desvenlafaxine succinate extended-release tablets 50mg and 100mg, a generic version of Pristiq by Pfizer Inc. Breckenridge and Alembic filed their Paragraph IV ANDA on the first-possible submission date and expects to share 180-day exclusivity with other ANDA first filers.
  • On June 25, 2012, Bristol-Myers Squibb Co and Pfizer, Inc.announced that the U.S. Food and Drug Administration has issued a Complete Response Letter (CRL) regarding the New Drug Application for ELIQUIS (apixaban) for the prevention of stroke and systemic embolism in patients with nonvalvular atrial fibrillation.
  • On June 22, 2012, Pfizer Inc and Protalix BioTherapeutics, Inc. announced that the European Medicines Agency (EMA)'s Committee for Medicinal Products for Human Use (CHMP) has adopted an Opinion recommending against the Marketing Authorization of taliglucerase alfa, an enzyme replacement therapy (ERT) for the treatment of Gaucher disease.
  • On June 21, 2012, Pfizer Inc announced that the U.S. Food and Drug Administration approved the use of Lyrica (pregabalin) capsules CV for the management of neuropathic pain associated with spinal cord injury.
  • On June 19, 2012, KineMed Inc announced that it is to take part in a multiannual research and development program with Glaxosmithkline Plc which will use KineMed Inc's platform to discover biomarkers in therapeutic areas which are of interest to Glaxosmithkline Plc.
  • On June 19, 2012, Reuters reported that Glaxosmithkline Plc and Novartis AG will get federal money to help develop medicines against pandemics and bioterrorist threats.
  • On June 19, 2012, Eli Lilly And Co announced that it has declared a dividend for the third quarter of 2012 of $0.49 a share on outstanding common stock. The dividend is payable September 10, 2012 to shareholders of record at the close of business on August 15, 2012.
  • On June 19, 2012, Pfizer Inc announced that the PROFILE 1007 study met its primary endpoint, demonstrating that XALKORI (crizotinib) significantly improved progression-free survival (PFS) when compared with pemetrexed or docetaxel, in previously treated patients with anaplastic lymphoma kinase (NYSE:ALK)-positive advanced non-small cell lung cancer (NSCLC).
  • On June 18, 2012, Reuters reported that the supreme court ruled that pharmaceutical companies do not have to pay overtime to their representatives who visit doctors' offices to promote their products, a dispute that had threatened the industry with billions of dollars in potential liability.
  • On June 18, 2012, Reuters reported that U.S. health regulators declined to approve a Pfizer Inc's drug for a rare and fatal neurodegenerative disease until a second study can establish the effectiveness of the treatment.
  • On June 18, 2012, Reuters reported that Takeda Pharmaceutical Company Limited will stop distributing 13 Pfizer, Inc. drugs it now sells in Japan at the end of this year and Pfizer itself will begin selling them from 2013.
  • On June 15, 2012, Glaxosmithkline Plc announced that the U.S. Food and Drug Administration has approved the vaccine MenHibrix [Meningococcal Groups C and Y and Haemophilus b Tetanus Toxoid Conjugate Vaccine].
  • On June 15, 2012, GlaxoSmithKline plc announced that it has received a renewed invitation from Human Genome Sciences Inc' to participate in its strategic alternatives review process which started in April.
  • On June 13, 2012, Reuters reported that CVS Caremark Corporation and Rite Aid Corporation filed an antitrust lawsuit accusing Pfizer Inc and Teva Pharmaceutical Industries Ltd of conspiring to keep generic versions of antidepressant Effexor XR off store shelves.
  • On June 12, 2012, Stiefel, a Glaxosmithkline Plc company announced that it has entered into a worldwide agreement to acquire Toctino (alitretinoin) from Basilea Pharmaceutica Ltd. (Basilea).
  • On June 12, 2012, Eli Lilly And Co announced an increase of its network of manufacturing capabilities in this key emerging market Country through an expanded collaboration with Novast Laboratories, LTD. Novast, a generic and specialty pharmaceutical company based in Nantong, China, has established high systems and manufacturing facilities for the global and domestic Chinese markets.
  • On June 11, 2012, Eli Lilly And Co and Incyte Corporation announced the presentation of 12-week results from a Phase IIb study of baricitinib, formerly LY3009104 (INCB28050), an orally available janus kinase (JAK) inhibitor, in patients with active rheumatoid arthritis (RA).
  • On June 9, 2012, Glaxosmithkline Plc announced that detailed findings from a Phase III study comparing the investigational glucagon-like peptide-1 (GLP-1) receptor agonist albiglutide to prandial insulin (Lispro), were presented at the American Diabetes Association Meeting (ADA) in Philadelphia, USA, and show that the effect is maintained out to 52 weeks.
  • On June 9, 2012, Boehringer Ingelheim Pharmaceuticals, Inc. and Eli Lilly and Co presented results from two randomized phase 3 clinical trials and a post-hoc analysis for linagliptin at the American Diabetes Association's 72nd Scientific Sessions.
  • On June 7, 2012, Glaxosmithkline Plc and XenoPort, Inc. announced that the United States Food and Drug Administration has approved Horizant (gabapentin enacarbil) Extended-Release Tablets for the management of postherpetic neuralgia (PHN) in adults.
  • On June 7, 2012, Pfizer Inc announced the next steps in the strategic alternatives review process for the Company's Animal Health business. Preparations are underway to file a registration statement in the U.S. for a potential initial public offering of a minority ownership stake in the new company.
  • On June 6, 2012, Reuters reported that Pfizer Inc will cut 177 jobs in Ireland following the expiration of patents on blockbuster cholesterol drug Lipitor, highlighting the exposure of Ireland's export-driven economy to the patent cliff facing many in the pharmaceutical sector.
  • On June 4, 2012, Elan Corporation, plc announced that for fiscal 2012, it expects revenue to be in the range of $1.2 billion to $1.250 billion and adjusted EBITDA to be $200 million or more.
  • On June 4, 2012, Reuters reported that late stage trials of two experimental skin cancer drugs from Glaxosmithkline Plc, each designed to block different pathways used by tumor cells, have found the drugs helped patients with fewer side effects than current chemotherapy.
  • On May 31, 2012, Kowa Pharmaceuticals America, Inc. and Eli Lilly and Company announced results of the PREVAIL U.S. study (Pitavastatin compaREd with praVAstatin In Lowering LDL-C in the U.S.) which evaluated the efficacy of LIVALO (pitavastatin) 4 mg compared with pravastatin 40 mg in reducing low-density lipoprotein cholesterol (LDL-C), the primary endpoint, as well as effects on other lipid parameters and lipoprotein particles in adult patients with primary hyperlipidemia or mixed dyslipidemia.
  • On May 30, 2012, Welichem Biotech Inc. and Stiefel, a Glaxosmithkline Plc company announced that they have entered into an agreement for the acquisition by Stiefel of exclusive development and commercialization rights to the novel anti-inflammatory agent, WBI-1001, in all territories in the world outside of China, Taiwan, Macao and Hong Kong.
  • On May 25, 2012, Reuters reported that Pfizer Inc said a U.S. health advisory panel voted against its drug to treat a rare neurodegenerative disease as the data did not show enough evidence of efficacy.
  • On May 22, 2012, Reuters reported that U.S. drug reviewers on Tuesday recommended rejecting a Pfizer Inc drug because the data did not prove it worked well in treating a rare neurodegenerative disease.
  • On May 18, 2012, Pfizer Inc announced the results of studies on Lyrica (pregabalin) capsules CV presented at the American Pain Society Annual Meeting in Honolulu. The studies included exploratory research designed to provide new insight into how Lyrica works in the brains of patients with fibromyalgia.
  • On May 9, 2012, Reuters reported that Pfizer Inc won support from a U.S. advisory panel on Wednesday for its arthritis drug. A panel of outside experts to the U.S. Food and Drug Administration voted 8-2 to recommend approval of tofacitinib, a treatment for patients with rheumatoid arthritis who have not had success with at least one other drug for the disease.
  • On May 2, 2012, Pfizer Inc And Protalix BioTherapeutics Inc. announced that the United States Food and Drug Administration approved ELELYSO (taliglucerase alfa) for injection, an enzyme replacement therapy for the long-term treatment of adults with a confirmed diagnosis of type 1 Gaucher disease.
  • On April 26, 2012, Pfizer Inc announced that the Board OF Directors of the Company declared a $0.22 second-quarter 2012 dividend on the Company's common stock, payable June 5, 2012, to shareholders of record at the close of business on May 11, 2012.
  • On April 24, 2012, Reuters reported that Nestle SA may sell about 10% to 15% of the $11.9 billion baby food business it is buying from Pfizer Inc to address antitrust concerns.
  • On April 23, 2012, Pfizer Inc announced that it has entered into an agreement to divest its Nutrition business to Nestle SA for $11.85 billion in cash.
  • On April 18, 2012, Reuters reported that Pfizer Inc is near a deal to sell its baby formula business to Nestle SA for at least $9 billion.
  • On April 16, 2012, Eli Lilly and Company announced that its Board of Directors declared a dividend for the second quarter of 2012 of $0.49 a share on outstanding common stock.
  • On April 16, 2012, Vanda Pharmaceuticals Inc. announced that it has acquired an exclusive world-wide license from Eli Lilly and Company (Lilly) to develop and commercialize a small molecule neurokinin 1 receptor (NK-1R) antagonist for all human indications.
  • On April 7, 2012, Eli Lilly and Company and Avid Radiopharmaceuticals, Inc., a wholly owned subsidiary of Lilly, announced the U.S. Food and Drug Administration approval of Amyvid, a radioactive diagnostic agent indicated for brain imaging of beta-amyloid plaques in patients with cognitive impairment who are being evaluated for Alzheimer's Disease and other causes of cognitive decline.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Source: Earnings Preview: Forest Laboratories