NEW YORK (TheStreet) -- Endo International (ENDP) stock is slightly lower by 0.15 to $84.87 after Cantor Fitzgerald increased its price target to $92 from $80 and reiterated its "hold" rating for the Malvern, PA-based global specialty healthcare company.
Endo's pending transaction for generic drug producer Par Pharmaceutical will give the company entrance into the generic medications market, according to Cantor Fitzgerald.
On May 18, Endo announced that it is purchasing Par for $8.05 billion from private-equity firm TPG Capital, and the company expects the acquisition to be completed in the second half of 2015.
"We expect Endo to issue approximately 40 million new shares to finance this transaction, and management has indicated that it plans a $2 billion equity raise sometime in the near future," said Cantor Fitzgerald analyst Irina Koffler.
While there is potential for additional value creation from this transaction, Endo management indicated that the deal will position it for even more M&A in the future, according to Cantor Fitzgerald.
Separately, TheStreet Ratings team rates ENDO INTERNATIONAL PLC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate ENDO INTERNATIONAL PLC (ENDP) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ENDP's very impressive revenue growth greatly exceeded the industry average of 8.0%. Since the same quarter one year prior, revenues leaped by 51.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- ENDO INTERNATIONAL PLC 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, ENDO INTERNATIONAL PLC continued to lose money by earning -$2.23 versus -$4.67 in the prior year. This year, the market expects an improvement in earnings ($4.53 versus -$2.23).
- 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 82.7% when compared to the same quarter one year prior, rising from -$436.91 million to -$75.72 million.
- Net operating cash flow has significantly increased by 66.02% to -$89.81 million when compared to the same quarter last year. In addition, ENDO INTERNATIONAL PLC has also vastly surpassed the industry average cash flow growth rate of -21.42%.
- You can view the full analysis from the report here: ENDP Ratings Report