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Taro Pharmaceutical (TARO -7%) slides after earlier reporting Q1 earnings of $1.10 per share on...

Taro Pharmaceutical (TARO -7%) slides after earlier reporting Q1 earnings of $1.10 per share on net sales of $165.1M, an increase of 13.8%, from a year ago. Gross margin grew to 72.4% from 68.3%, offsetting an increase in Research and development expenses by 23.9% to $12.2M. Settlements and loss contingencies totalled $33.3M, dragging down operating income to $63.1M, or 38.2% of net sales, compared to $66.2 million, or 45.6% the year prior.

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Comments (5)
  • Moy
    , contributor
    Comments (13) | Send Message
     
    Taro at $59 is a great buying opportunity. Considering the $33.3M of the “Settlements and loss contingencies” is a onetime expense, elimination of this expense will add $.50/share to profits in the future Q’s. Also, profits were reduced because of a %23 increase in R&D. Now Taro’s pipeline is full with 21 new drug applications awaiting FDA approval (among them 2 NDA’s ). End even if yearly profits is only $6.4/share ((1.1+.5)*4)), that makes it a P/E of less than 10 which is less than half of its competitors like Perrigo.
    24 May 2013, 12:11 PM Reply Like
  • carroll6
    , contributor
    Comment (1) | Send Message
     
    Looks to me like they pushed in a lot of settlement and loss contingency expenses, as well and research and development in the final quarter.
    24 May 2013, 12:19 PM Reply Like
  • Brendan O'Boyle
    , contributor
    Comments (1192) | Send Message
     
    I don't think the slide was due to the earnings report. It was released yesterday morning, I remember reading it and then seeing the stock was up 1% on a down day and figuring that meant the report had been well received.

     

    Today was more of a fat finger trade with some antsy trader closing out a position. When you invest in small cap stocks you have to accept this, you'll have days they go down 10% for no reason at all.

     

    I thought about buying some more this morning when it opened, I think I really need to start holding more cash on my books for days like today. This is the third time a stock I own has opened down 8-10% in the past two weeks for no reason. Then the stocks just melt up back to where they were like nothing happened. Very strange market action lately.
    24 May 2013, 04:24 PM Reply Like
  • Retail Investor
    , contributor
    Comments (470) | Send Message
     
    i am long taro. i think it sells at a big discount. you can find my opinions and dd on taro here -> http://bit.ly/PymyGa
    27 May 2013, 10:49 PM Reply Like
  • Don12379
    , contributor
    Comments (5) | Send Message
     
    I am still very bullish on Taro.

     

    Fundamentals:
    1. Strong pipeline. 2. Healthy investment in R&D
    3. Lots of cash -$550->$12/share and almost no debt.
    4. Operation margins very healthy – north of %70 .
    5. Earnings for the year expected to be north of $6 – P/E still very low
    6. Taro is still very cheap on fundamental. One of the cheapest pharma companies around.
    7. Buyout -Taro is still very attractive for another pharma company . including Sun pharma, and even if Pharma submits another low ball offer, it still will be at premium to the market. So there is not to much downside risk.

     

    Technical:
    In the morning Taro took on the chin, but then turned around and recovered at leat half of the losses.
    Today- very high volume – many weak hands are out , probably replaced by institutions who were waiting for a buying opportunity, and not likely to sell in case of another low-ball offer from Sun.

     

    Psychological:
    Many Taro’s investors are still paranoid about the possibility of Taro’s board selling out the minority to Sun pharma – hopefully some of them left today.

     

    If there was an accounting ploy in this Q by Taro’s board (After the gaming allegations of last year probably many investors do not trust Taro’s board) - Investor were not deterred- for every seller there was a buyer. and Sun and Taro's board probably noticed that.
    24 May 2013, 05:34 PM Reply Like
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