Ivax Dn 17% After 3Q EPS, Rev Missed Street Views
DOW JONES NEWSWIRES
November 1, 2004 1:51 p.m.
By Jen Ryan
Of DOW JONES NEWSWIRES
NEW YORK -- Shares of Ivax Corp. (IVX) fell 19.7% and also reached a 52-week low Monday after the company said competitive pricing hurt its third-quarter results, causing them to fall short of Wall Street's expectations.
For the quarter ended Sept. 30, the pharmaceutical company reported third-quarter net income of $44.4 million, or 17 cents a share, compared with its year-ago income from $21.6 million, or 9 cents a share, but below the average analyst forecast of 21 cents a share.
Ivax's third-quarter net revenue rose to $439.1 million from $360.6 million a year earlier but was lower than the $467 million Wall Street was expecting.
Despite its third-quarter challenges, Ivax said it expects a good fourth quarter and 2005 because of several factors, including continued growth in its generic products and continued growth in sales of its asthma treatment in the U.S. and Europe.
Ivax expects to meet or exceed its estimate for 2004 of 71 a share. Wall Street currently expects earnings of 81 cents a share for the year.
Shares of Ivax recently traded down $3.56, to $14.53, on volume of 13.6 million. Average daily volume is 1.4 million shares.
Earlier Monday, shares fell to $14.50, below the 52-week low of $14.70 set Oct. 30, 2003.
In a press release Monday, Ivax Vice Chairman and President Neil Flanzraich said pressure from competitive pricing hurt contributions from several of its products during the third quarter.
Ivax's six-month exclusivity period of metformin ER, used to treat type 2 diabetes, expired in the third quarter, prompting aggressive competitive pricing that curtailed its revenue and earnings, Flanzraich said.
Meanwhile, he added that aggressive pricing by a generic distributor hurt sales from its diabetes treatment glyburide/metformin HCl, while new generic versions of gabapentin, the generic equivalent of Pfizer Inc.'s (PFE) Neurontin for epilepsy, markedly reduced prices for that drug.
Additionally, Flanzraich added, profits in Europe were limited by generic pricing pressures and cyclical, weak summer sales, Flanzraich added.
Advest Inc. analyst Andrew Forman said the major surprise during the quarter was that Ivax didn't benefit from its early launch of generic Neurontin, which would have made the quarter stronger than it was.
The company had exclusive rights to the drug for about six weeks and made a lot of money on it during that time. After its exclusivity ended, however, and other generics offered the drug at much lower prices, Ivax was forced to rebate some of the profits to customers, Forman said.
Despite the painful third quarter, though, Forman said long-term investors should consider the drop in share price a good opportunity to buy Ivax stock because it remains one of the best strategically positioned companies and is one of the few companies that can grow its earnings by more than 20% over the next two years.
Ivax is a global company with a generic drug pipeline that is second to only Teva Pharmaceutical Industries (TEVA), and it has a rapidly growing brand respiratory business, which includes a new approval from the Food and Drug Administration for its proprietary asthma product today, he said.
Forman, who has a strong buy rating on the stock, does not own shares of Ivax and Advest does not have an investment banking relationship with the company.
A company spokesman was not immediately available to provide comments. |
