This Cheap Drugmaker Beats Estimates And Is Ready To Move Higher

| About: Endo International (ENDP)

Endo Health Solutions (ENDP) finally gave its suffering shareholders some good news in the last week with a better than expected earnings report and a new stock buyback program. This cheap drugmaker looks like it finally bottomed here and is ready to move significantly higher.

Earnings highlights and catalysts for ENDP:

  • ENDP reported quarterly earnings of $1.27 per share, excluding non-recurring items, $0.08 better than the consensus estimates of $1.19 a share.
  • Revenues also rose 29.2% Y/Y to $785mm versus the $774.79mm consensus.
  • The company sees EPS of $5.00-5.20 for FY2012, excluding non-recurring items, vs. $5.03 consensus estimates.
  • Endo Health Solutions also just announced a $450mm stock repurchase plan

"Endo Health Solutions provides specialty healthcare solutions in the United States and internationally. It markets both branded and generic products." (Business description from Yahoo Finance).

Four addition reasons ENDP is still a bargain at under $31 a share:

  1. The median price target on the stock by the 18 analysts that cover the stock is $43 a share, some 40% above its current stock price.
  2. The stock is very cheap at under six times forward earnings, a discount to its five year average (8.8). It also has a five year projected PEG of under 1(.70)
  3. ENDP is selling at the very bottom of its five year valuation range based on P/B, P/E, P/S and P/CF.
  4. The stock has gone through a bottoming process and looks ready to move higher based on earnings (See Chart)

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Disclosure: I am long ENDP.