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Why Lannett (LCI) Stock Is Down Today

Stocks in this article: LCI

NEW YORK (TheStreet) -- Lannett  (LCI) plunged Wednesday after the generic prescription pharmaceuticals manufacturer announced it had received interrogatories and a subpoena from the State of Connecticut Office of the Attorney General.

The office is conducting an investigation into the company's pricing of digoxin, which treats heart rhythm problems and heart failure. The Attorney General is inquiring if anyone acted in a way that resulted in "fixing, maintaining or controlling prices of digoxin or...allocating and dividing customers or territories relating to the sale of digoxin in violation of Connecticut antitrust law," according to Lannett's statement.

The company said it complied with "all applicable laws and regulations" and will fully cooperate with the investigation.

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The stock was down 15.42% to $39.83 at 12:08 p.m. More than 1.8 million shares changed hands, compared to the average volume of 628,868.

Separately, TheStreet Ratings team rates LANNETT CO INC as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate LANNETT CO INC (LCI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • LCI's very impressive revenue growth greatly exceeded the industry average of 5.6%. Since the same quarter one year prior, revenues leaped by 105.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • LCI's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.91, which clearly demonstrates the ability to cover short-term cash needs.
  • LANNETT CO INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LANNETT CO INC increased its bottom line by earning $0.46 versus $0.14 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $0.46).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 482.6% when compared to the same quarter one year prior, rising from $3.95 million to $23.00 million.
  • The gross profit margin for LANNETT CO INC is currently very high, coming in at 72.19%. It has increased significantly from the same period last year. Along with this, the net profit margin of 28.74% is above that of the industry average.
  • You can view the full analysis from the report here: LCI Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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