Forest Labs Likely to Miss 4Q Earnings - Analyst Blog
April 22 2013 - 8:00AM
Zacks
We expect Forest
Laboratories Inc. (FRX) to miss earnings expectations when
it reports fourth-quarter fiscal 2013 results on Apr 23, before the
opening bell. Forest Labs’ fiscal year ends on Mar 31.
Why a Likely Negative
Surprise?
Our proven model does not
conclusively show that Forest Labs is likely to beat earnings this
quarter. That is because a stock needs to have both a positive
earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings
ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to
happen. Unfortunately this is not the case here as elaborated
below.
Negative Zacks
ESP: This is because the Most Accurate estimate stands at
18 cents while the Zacks Consensus Estimate is higher at 19 cents.
This results in a difference of -5.26%.
Zacks Rank #3
(Hold): Forest Labs’ Zacks Rank #3, however, complicates
the predictive power of ESP. This combined with a negative earnings
ESP makes Forest Labs an unlikely candidate for an earnings beat
this quarter. We caution against stocks with Zacks Ranks #4 and #5
(Sell rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revision
momentum.
Factors at Play for
4Q
In the preceding quarter Forest
Labs’ results were hit by the loss of exclusivity of Lexapro as
well as the disappointing performance of Namenda. We expect the
company’s results will continue to be affected by generic
competition for Lexapro and the performance of Namenda, which is
expected to face generic competition in early 2015. Moreover, the
performance of new products, especially Teflaro, has been below
expectations over the last few quarters.
Stocks to
Consider
Here are some companies you may
want to consider as our model shows they have the right combination
of elements to post an earnings beat this quarter:
Eli Lilly and
Company (LLY) has an Earnings ESP of +3.85% and holds a
Zacks Rank #3 (Hold)
GileadSciences
(GILD) has an Earnings ESP of +2.08% and carries a Zacks Rank #3
(Hold).
VIVUS Inc. (VVUS),
has an Earnings ESP of +11.77% and carries a Zacks Rank #3
(Hold).
FOREST LABS A (FRX): Free Stock Analysis Report
GILEAD SCIENCES (GILD): Free Stock Analysis Report
LILLY ELI & CO (LLY): Free Stock Analysis Report
VIVUS INC (VVUS): Free Stock Analysis Report
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