Today’s news: Supernus Pharmaceuticals (SUPN) reports disappointing first quarter.
Supernus Pharmaceuticals (SUPN) reported a disappointing first quarter yesterday, with revenue and profits nowhere near the consensus estimates. Revenue of $85.5 million missed the $103.6 million consensus estimate, and diluted EPS of $0.34 missed the $0.47 estimate. The company has $815 million in cash and marketable securities. Management’s full-year 2019 revenue guidance was consistent with current consensus estimates, meaning that the full-year revenue outlook remains intact.
The quarter was adversely impacted by:
1. A buildup of inventory in the fourth quarter of 2018 that impacted shipments in the first quarter of 2019;
2. Early 2019 insurance plan dynamics that put pressure on prescription growth;
3. High early-year consumer insurance deductibles;
4. And a much higher effective tax rate of 24% vs. 15% a year ago.
The company characterized the first three issues as one-time events, while the tax rate is expected to continue at the higher level. Inventory levels are now back to normal, as are shipment and prescription trends from Oxtellar XR and Trokendi XR. In addition, Supernus has “a rich calendar of upcoming clinical and regulatory milestones behind three late-stage pipeline products.”
SUPN is an undervalued, small-cap growth stock that could appeal to traders and growth stock investors. The stock has been in a consistent trading range this year, largely traveling between 34 and 39, not yet participating in this year’s bull market. Risk-tolerant investors should buy now, while the stock is low within its trading range.
The political landscape holds land mines for the healthcare industry. Expect volatility. Strong Buy.