Endo International (ENDP) Has Catalysts Despite NT Weakness - Guggenheim

Despite reducing near term guidance, Guggenheim analyst, Louise Chen, believes Endo International (NASDAQ: ENDP) has several catalysts that will cause upward earnings revisions. On 3/17/16, ENDP provided more color on its 1Q16 EPS guidance, which the company now sees coming in at $1.02-$1.08 (consensus was at $1.15). To be conservative, 1Q16E EPS drops to $1.01. However, the analyst continues to think Xiaflex, Belbuca, and Par generics will drive upward earnings revisions and multiple expansion.

ENDP shares are down 12% since 3/16/16 (S&P500 flat). Despite the pullback, the analyst thinks fundamentals remain intact and the risk/reward profile looks compelling for the following reasons:

1) Valuation looks inexpensive, P/E at 5.0x '16E EPS and 4.4x '17E EPS vs. comps at 13.2x '16E EPS and 12.7x '17E EPS, despite better earnings growth prospects for ENDP

2) Modest expectations for Belbuca, Xiaflex, and generics business

3) Insider buying of stock, including purchases by the CEO

4) Vaginal mesh concerns overdone, ENDP should generate ~$3B of CFLO over next two years, and vaginal mesh claims to be paid through '17 are estimated to be $575MM.

Upcoming catalysts:

1) Potential Voltaren gel generic '16+

2) Advance additional Xiaflex indications, '16+

3) Belbuca launch progression '16+

4) M&A and/ or business development

For an analyst ratings summary and ratings history on Endo International plc click here. For more ratings news on Endo International plc click here.

Shares of Endo International plc closed at $29.84 yesterday.

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