This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Diagnose Endo's Health Before You Invest

NEW YORK (TheStreet) -- Some companies can't seem to get out of their own way. This has always been my biggest issue with Endo Health Solutions (ENDP - Get Report), a company I've consistently wanted to like. Too bad Endo hasn't been an easy company to understand.

While doing extraordinary well as a specialty drug company, outperforming rivals like Forest Labs (FRX) and Teva Pharmaceutical (TEVA), Endo's management decided it was time to shake things up to generate more growth. To diversify the business into such areas as services and medical records, management took on additional debt to acquire American Medical Systems, a move that over-leveraged the company.

To enter this already-established market, Endo's higher-ups decided to look for acquisitions while forfeiting a strong cash-flow-generating drug business. The services and medical records sector was highly competitive and dominated by giants like Johnson & Johnson (JNJ) and Abbott Labs (ABT). Endo overestimated its abilities while discounting what it already had.

A series of unfortunate events ensued. Not only did Endo fail to meet its 2012 earnings guidance, but warned that 2013 revenue and earnings-per-share targets would fall short. There was also the dire issue of Endo's portfolio of drugs, many of which were facing expiring patents, which left investors questioning the company's long-term health.

In an unsurprising move, Endo announced the departure of CEO David Holveck, who left in March of this year, almost 18 months before his contract expired. The Street welcomed the news. Shares went higher even though analysts had just downgraded the stock given the poor outlook for generic drugs. Miraculously, all of these issues are now resolved. At least it appears that way.

Endo shares are soaring to all-time highs following yet another acquisition, under the management of new CEO Rajiv De Silva. Last week, the company announced that it had reached a definitive agreement to acquire Canadian specialty drug company Paladin Labs for $77 per share, amounting to a 20% premium, or $1.6 billion.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
ENDP $86.19 0.00%
AAPL $122.99 0.00%
FB $96.99 0.00%
GOOG $631.93 0.00%
TSLA $263.82 0.00%

Markets

Chart of I:DJI
DOW 17,751.39 +121.12 0.69%
S&P 500 2,108.57 +15.32 0.73%
NASDAQ 5,111.7330 +22.5270 0.44%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs