PRX

[mrmarket]

$$$MR. MARKET$$$ Loves PRX
by: mr_market63 (43/M)
Long-Term Sentiment: Strong Buy 09/18/03 03:27 pm
Msg: 6429 of 6458

I’m so depressed. The Red Sox once again have failed to take the AL East title. I think I’ll reach for some Serzone. Oooops..I can’t even do that because I lost all my money betting on the Red Sox. But there is a solution. I will ingest a generic version of Serzone, called Nefazodone. It’s cheap and it works great. Wow! I’m happy already.

Today I bought Par Pharmaceutical (PRX) at 72. I will sell it in 4 to 6 weeks at 83. Here’s why I like PRX:

Pharmaceutical Resources (PRX) is a holding company which, through its subsidiaries, develops and markets a broad line of generic drugs in the U.S.; develops and makes in small quantities complex synthetic active pharmaceutical ingredients.

PRX’s stock is up 283% over the last 12 months yet its PE is a very modest 27. This is a great value for the pumped up drug industry. In fact, the Value of $10,000 invested five years ago in PRX would be $ 167,875. Ladies and germs, it’s still not too late to get in. Here’s why:

How do generic drugs work? Simple…it’s like sitting next to the smart kid during the Thermodynamics final exam. Your work isn’t necessarily original, but you end up with the same grade when you get your report card. Isn’t this how everyone got through college? Fat, drunk, and stupid is no way to live your life, is it?


Net sales in the first half of 2003 increased 22%, year to year, reflecting new product launches, and other revenues (from a profit sharing agreement with Genpharm) in the current interim only. Gross margins widened, driven by the royalty revenue of omeprazole, but R&D costs and SG&A expenses rose significantly faster than revenues
The financial performance of PRX is simply amazing. Return on Equity was 44% in 2002. Return on Assets,over the same period, was 31%
Even one week before the Nefazodone coup, PRX stomped all over Paxil. Pharma Resources is a respected player in the U.S. market and will capture the majority of the generic market share (around 60%) for the rest of 2003. Pharma Resources will pick up $201 million in revenue from the sale of generic Paxil the rest of this year. Paxil sales last year totaled $2.3 billion. Holy cow! I didn’t know that many Red Sox fans existed. Generic penetration of Paxil will be 12% in the third quarter and 75% in the fourth quarter.

With all this new business, you’re looking at a jump to about $3.97/share of earnings in 2004. With the existing PE, this would propel the stock price to $107.19/share which is well past my target. Of course you don’t have to wait until 2004 to reap these rewards. Once the market realized the gravy train is here, the stock price will be bid up well before earnings materialize.


Among the 25 drugs currently awaiting approval by the FDA, PRX believes
that several may represent first-to-file opportunities entitling the Company, or its strategic partner, up to 180 days of marketing exclusivity or co-exclusivity. These products include testosterone 1% gel (Androgel(R))…Where exactly do you rub this anyway?

I am HUGE!!

$$$MR. MARKET$$$

I'm likin this pick

current price is 64.07
support is 59.32 (50dma)
resistance is 73.25 (52 wk hi)

reward/risk ratio is=(73.25-64.07)/(64.07-59.32)=1.93

so almost a 2/1 reward to risk ratio at current price, also target price (72) is below anticipated resistance (73.25).

[jiesen]

glad to see this one recovering- it had me worried for a minute (only a minute though)

[mrmarket]

Originally Posted by jiesen

glad to see this one recovering- it had me worried for a minute (only a minute though)

yee of little faith...where do you think those 32 consecutive profitable trades came from??

remember the mantra....earnings earnings earnings

Anyone know any news on today's PRX decline?

Seems it could be a good day to add to position or start one. It is down on higher volume, though. The move seems company specific rather than industry although the industry has dropped on IBD over the past couple of months as the latest rotation takes place.

I think I'll add some to lower my cost basis.

Originally Posted by CHSMITHINS

Anyone know any news on today's PRX decline?

Seems it could be a good day to add to position or start one. It is down on higher volume, though. The move seems company specific rather than industry although the industry has dropped on IBD over the past couple of months as the latest rotation takes place.

I think I'll add some to lower my cost basis.

Mayhap you should find out why it went down on such a good day before you add to it.

[mrmarket]

Stock Screen
Par Excellence

By Jack Hough
June 17, 2004
Note: This column was originally published on SmartMoney Select, our premium, subscription-based website. To access this and other content from SmartMoney Select on a daily basis, click here to start your FREE TRIAL now!

"THE PAST 24 HOURS have been a Ferris wheel," remarked one analyst. "Chaos reigns," cried another. On April 7, generic-drug maker Par Pharmaceutical (PRX) announced that it had received FDA approval to sell a knock-off of Schering Plough's (DGP) Rebetol-brand ribavarin pills for Hepatitis C. Novartis (NVS) also received such an approval, but the two companies looked to have secured shared exclusivity of the drug for at least six months. Industry watchers figured the new ribavarin pill at a 35% to 40% discount to Rebetol would give Par's top line a booster shot of $50 million to $65 million in 2004. The stock quickly jumped 7%.

The next day's news, though, had investors grimacing like toddlers swallowing cod liver oil. Schering Plough had decided not only to enter the generic market for its own drug, but also to stomp on the market with a discount of 70%. Analysts called the move "irrational," but nonetheless cut their revenue projections for Par's generic version in half. Shares immediately gave back their 7% run-up, and have kept right on falling as Reuters Research's 2004 earnings consensus for Par has shriveled to $2.75 from $3.21. The stock since April 7 is down 37%. There's reason to believe, however, that the stock has gotten cheap; it turned up recently on our Three-Point Value Screen.

Investors differ as to which measure of a company's income they prefer to use as the basis for valuation assessments. Earnings and the price/earnings ratio are probably the most popular, and academic research suggests that earnings are more closely tied to share performance than other measures. But sales, and the corresponding price/sales ratio, are favored for their lack of reliance on extensive accounting adjustments. Cash flow, meanwhile, is the choice of those who like measuring actual money changing hands, not income being accrued and expenses incurred.

Our Three-Point Value screen uses the P/E, P/S and P/CF ratios, along with some other measures, to find companies that look cheap from a variety of views. Engine maker Cummins (CMI), the subject of our last Three-Point Value screen on May 12 ("Diesel Power"), is an example. The loss of a major customer was just one reason investors were running from its shares at the time, but our screen suggested it was underpriced. The stock is up a quick 12% since our write-up.

See the recipe to the right for details on the criteria used in our Three-Point Value search, and fire up our stock screener anytime you'd like to run it for yourself. This time around the screen pulled up nine companies, including Par Pharmaceutical.

Spring Valley, N.Y.-based Par has sold $767 million worth of drugs in the past year. The company markets the 29 drugs it manufactures, and 42 drugs made by others. In the past, Par has been the first to market with generic equivalents of Prozac for depression and Megace for breast cancer. Those two drugs, and two other of Par's big sellers — generics of Paxil for anxiety and Prilosec for acid reflux — are expected to see increased competition and a decrease in revenues this year. But Par has 60 products in development and another 35 awaiting FDA approval, and its April purchase of Somerset, N.J.-based Kali Laboratories for $135 million gives it 25 more drugs in development and 14 more awaiting approval. In total, Par now expects to launch 36 products in 2004 and 2005.

First-quarter results for the company, reported April 29, showed sales growing 99% to $211.8 million. Earnings excluding a $1.7 million gain from the sale of a facility rose 27% to $28.5 million. Per-share earnings of 80 cents met analysts' recently reduced expectations. Jeffrey Long-McGie, an analyst with stock research firm Think Equity, called the results "gut-wrenching" in an April 30 note, and figured that only 32 cents of earnings came from Par's "base business," that is, its business excluding acquisitions. But Long-McGie noted that the results were expected and called the stock "dramatically undervalued."

Long-McGie says shares should be worth 17 times his 2005 estimate of $3.37, or about $58, within a year, and points out that there's "tremendous upside potential" to his estimate if anticipated generic competition for Paxil is delayed, or if Par launches its generic equivalent of Ultracet acid-reflux medicine, expected in the first quarter of 2005, early. (Long-McGie doesn't own shares of Par Pharmaceutical; Think Equity doesn't have an investment-banking relationship with the company.)

A look at Reuters Research's eight-analyst consensus earnings data does nothing to contradict Long's view. Par shares trade at about $38, or 14 times 2004 earnings, compared with an average P/E of 22 for generic-drug makers. And Par is projected to increase earnings by 19% annually over the next five years, compared with 16% for the group. That gives the stock a price/earnings-growth, or PEG, ratio of 0.73, less than half of peers' 1.57 and the S&P 500's 1.60. A PEG that low suggests that the prognosis for Par's ailing shares may be promising after all.

[Karel]

Nice action! Up 17% right now for this day!

Shall I say it? Hmm, yes, I shall:

$$$Mr. Market$$$ is HUGE !!!

Regards,

Karel

[jiesen]

PRX is announcing its quarterly earnings tomorrow, expected to be around $0.40/shr. Anyone have a guess what the real #'s going to be? I say $0.43.

[jiesen]

http://biz.yahoo.com/ap/050224/earns...eutical_1.html

Hmmm, .12 vs .40 - not good.

I guess they forgot to mention that .40 estimate didn't factor in the Kali acquisition, and that before that charge, they made .44... oh well. Let's just wait and see if the acquisition pays off.


Associated Press
Par Pharmaceutical 4Q Profit Plunges
Thursday February 24, 10:30 am ET
Par Pharmaceutical Fourth-Quarter Profit Plummets 89 Percent on Disappointing Sales

SPRING VALLEY, N.Y. (AP) -- Par Pharmaceutical Cos. reported Thursday that its fourth-quarter profit fell 89 percent, well below Wall Street expectations, as disappointing sales and increased research and development spending cut into earnings.

The drug maker said its quarterly income declined to $4.3 million, or 12 cents per share, down from $38.2 million, or $1.08 per share, a year ago. Revenue fell 49 percent to $114.2 million from $222.8 million last year.

Analysts surveyed by Thomson First Call expected earnings per share of 40 cents on revenue of $141.6 million.

"Certain expected new product introductions, like clonidine TDS, were delayed and the ribavirin launch proved disappointing," said Scott Tarriff, president and chief executive, in a statement. "All of these factors, along with a doubling of our investment in R&D, contributed to financial results that did not meet our expectations for the year."

Clonidine is a treatment for hypertension and ribavirin is a treatment for pneumonia.

For the full year, the company posted net income of $29.2 million, or 84 cents per share, down from $122.5 million, or $3.54 per share, last year. Excluding a research and development charge from the purchase of Kali Laboratories and a gain from the sale of a company facility, Par earned $2.26 per share.

Revenue rose 4 percent to $690 million from $661.7 million as the cost of goods sold rose 17 percent to $444 million. Analysts forecast earnings of $2.39 per share on revenue of $717.2 million.

Par Pharmaceutical shares fell 98 cents, or 2.5 percent, to $37.89 in morning trading on the New York Stock Exchange.