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 (52) | 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 (1283) | 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 (788) | 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.


    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.


    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.


    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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