Horizon Pharma (HZNP) Stock Climbs, Withdraws Depomed Offer

Horizon Pharma (HZNP) stock is advancing in pre-market trading on Friday, after withdrawing its roughly $1 billion offer for Depomed (DEPO) following a court ruling.
By Rachel Graf ,

NEW YORK (TheStreet) -- Horizon Pharma (HZNP) - Get Report stock is up 1.59% to $19.12 in pre-market trading on Friday, following the withdrawal of its roughly $1 billion offer for Depomed (DEPO) after an unfavorable court ruling. 

A California court blocked Horizon's bid for the Newark, CA-based pharmaceutical company, citing Horizon's alleged use of confidential information. 

Horizon made an all-stock offer for Depomed in May, and went hostile with a higher bid in July after Depomed rejected the initial offer, the Wall Street Journal reports.

Yesterday's court ruling marks the end of Horizon's months-long bid for the company. 

"While we strongly disagree with the court's ruling, we are withdrawing our offer to acquire Depomed," Horizon CEO Timothy P. Walbert said in a statement, noting that the ruling will not affect the company's 2016 guidance or "long-range plan or expectations."

Based in Dublin, Horizon Pharma is a specialty biopharmaceutical company focused on identifying, developing, acquiring or in-licensing and commercializing differentiated products that address unmet medical needs.

Separately, TheStreet Ratings team rates HORIZON PHARMA PLC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate HORIZON PHARMA PLC (HZNP) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The area that we feel has been the company's primary weakness has been its feeble growth in its earnings per share.

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

  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, HORIZON PHARMA PLC's return on equity significantly trails that of both the industry average and the S&P 500.
  • HORIZON PHARMA PLC reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, HORIZON PHARMA PLC reported poor results of -$3.70 versus -$2.29 in the prior year. This year, the market expects an improvement in earnings ($1.81 versus -$3.70).
  • HZNP's debt-to-equity ratio of 0.91 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.82 is very high and demonstrates very strong liquidity.
  • The gross profit margin for HORIZON PHARMA PLC is currently very high, coming in at 93.90%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HZNP's net profit margin of 1.44% significantly trails the industry average.
  • Net operating cash flow has significantly increased by 5928.85% to $88.38 million when compared to the same quarter last year. In addition, HORIZON PHARMA PLC has also vastly surpassed the industry average cash flow growth rate of -0.70%.
  • You can view the full analysis from the report here: HZNP

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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