Warner Chilcott’s Q3 Results Beat Estimates, Raises FY2012 EPS Guidance (WCRX)

Following the report of fiscal 2012 third-quarter results that beat estimates, the share price of specialty pharmaceutical company Warner Chilcott plc (NASDAQ: WCRX) opened with a positive gap on Friday but was unable to make further gains. While reporting the quarterly earnings before the market opened, the company also raised its FY2012 earnings per share guidance above the consensus of analysts.

The Ireland-based Warner Chilcott is engaged in the development of branded pharmaceutical products focused on womens healthcare, gastroenterology, dermatology and urology. The principal drugs of the company include Actonel for the treatment of postmenopausal osteoporosis, Loestrin FE for the prevention of pregnancy, Asacol for the treatment of ulcerative colitis, Doryx for the treatment of severe acne and Enablex for the treatment of overactive bladder.

Total revenue for the fiscal 2012 third quarter decreased to $606 million from $615 million in the similar period last year. The revenue estimate of analysts was $599.57 million for the third quarter of 2012. Warner Chilcott attributed the decline in fiscal 2012 third-quarter revenues to the decrease in the sales of Actonel.

Net income for the reported quarter increased to $113 million, or $0.45 per share, from $33 million, or $0.13 per share, in the third quarter of fiscal 2011.

Cash net income (CNI), or GAAP net income adjusted for the after-tax effects of non-cash items, was $241 million for the third quarter of fiscal 2012, compared with $185 million in the corresponding period of fiscal 2011.

Adjusted CNI for the third quarter was $247 million, or $0.99 per share, compared to $229 million, or $0.92 per share, in the comparable period of fiscal 2011. The earnings estimate of analysts was $0.78 per share for the third quarter.

The share price of Warner Chilcott, which was trading at around $16.00 for the entire first quarter, rallied in the third week of April 2012 following a rumor of a buyout by Germany’s Bayer for $32.00 per share. The share price attained a 52-week high of $23.28 on May 2. However, the stock price declined to $17.04 on July 24 as the company failed to find a suitable buyer. A patent infringement case filed by Bayer, followed by a stock downgrade by “The Street Ratings” from “buy” to “hold”, took the share price even lower to $12.80 on September 6. The news of a secondary offering by the principal shareholders of Warner Chilcott initiated another sell-off that pushed the share price down to the 52-week low of $11.21 few days ago. Friday, before the market opened, Cantor Fitzgerald upgraded Warner Chilcott from “hold” to “buy” with a price target of $15.00 per share.

The share price of Warner Chilcott opened trading on Friday 47 cents above the previous close of $11.46. The share price lost all its gain within minutes as traders took advantage of the price gap. However, the positive sentiment kept the momentum in favor of bulls who took the share price back to around $11.90 by noon. The shares gave up some gains in the second half of the trading session but remained in the positive zone.

On November 6, the board of Warner Chilcott had declared a semiannual cash dividend in the amount of $0.25 per share. The dividend is payable on December 14 to the shareholders of record at the close of the market on November 30. The dividend declared is as per the new dividend policy under which Warner Chilcott expects to pay a total annual cash dividend of $0.50 per share in equal semiannual installments of $0.25 per share.

Warner Chilcott also raised the adjusted CNI for the full-year 2012. The company now expects adjusted CNI in the range of $3.75 to $3.85 per share. The previous guidance range was between $3.55 and $3.65 per share for fiscal 2012. The earnings estimate of analysts was $3.69 per share for fiscal 2012.

Warner Chilcott ended Friday’s trading at $11.67 per share, up $0.21 or 1.8% on a volume of 5.1 million shares.

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Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.