Endo Pharamceuticals (ENDP) Q3 Results

Endo Pharmaceuticals reported earnings for the third quarter, and beat analyst expectations for both top-line revenues and EPS. ENDP revenues increased 71% to $759 million, driven by organic growth in the branded drugs division and growth in the generics division. Opana ER, Voltaren Gel, and Lidoderm grew 66%, 35%, and 3% respectively, for a total growth in the branded division of 17%. The company continues to effectively integrate acquired companies such as Qualitest, which provided a boon to the generic division and helped grow generic revenues by 17%. The combination of organic growth in the branded division and integration of the generic division has led to impressive sales growth and top-line revenues which exceeded analyst expectations by $9 million.

Operating expenses grew to $271 million from $162 million after acquisitions, but expenses as a percentage of sales remained flat. The company saw $48 million in net income, and EPS of $1.25, representing EPS growth of 45%. Additionally, the firm continues to generate strong operating cash flows, which it will use to pay off debt. The firm continues to perform strongly, as had reaffirmed guidance of $2.8 billion in sales and $4.65 in EPS for the fiscal year. The firm also sees a smooth integration of AMS and Qualitest, and believes the firm will be able to capitalize on more synergies than initially thought.

Ford 3Q11 Earnings

Ford reported third quarter earnings Wednesday that beat the mean street estimate, but fell short of its year over year figure. Revenues beat expectations by a wide margin, coming in at 33.1 billion, an increase of about $4 billion or 14%.Vehicle wholesales were 1.3 million units, up 93,000 or 7% from 2010. Pretax operating profit was $1.9 billion or $0.46 per share – down $111 million from 2010. The Pretax operating profit includes a one-time charge of $350 million for un-realized market-to-market adjustments on commodity hedging for future periods. Third quarter net income was $1.6 billion, or 41 cents per share, a $38 million decrease from third quarter 2010. Ford generated positive automotive operating-related cash flow of $400 million in the third quarter.

In the quarter Ford took a one-time-charge of $350 million to write down valuations of commodity hedging contracts (market-to-market), caused by the swift decline in commodity prices. However CEO Alan Mulally stated that this charge “could be reversed” if commodity prices rise in the future or the company recognizes the benefits from lower input costs. If the one-time charge is taken out, considering it could be reversed at some point in the future, earnings would actually be near $2.3 billion, beating the year-over-year figure.

Also, Ford paid down $1.3 billion in debt over the quarter, positioning the company closer to their target of $10 billion in debt by mid-decade. Ford’s Automotive gross cash exceeded debt by $8.1 billion, an improvement of $10.7 billion from the third quarter a year ago.

Share of Ford traded down ~6% on Wednesday. The negative impact on the stock was a result of management failing to declare a dividend or comment on when dividends will be resumed, despite recently having their credit rating upgraded to one-notch below investment grade. Additionally, management issued end of year guidance that indicated overall sales would be toward the lowering end of the 13 million units the company had previously estimated.

Shares of Ford closed Friday up 0.25% to $12.00

EW Reports Q3 Earning, SAPIEN valve close to approval

Edwards Lifesciences reported third quarter sales growth of 18.4% ($1.25 billion) from Q3 of last year. Sales were driven by an increased demand for their transcatheter heart valves, along with “sustained strength in clinical care.” Transcatheter heart valve sales for the quarter were reported at $82.6 Million, a 69.1% increase over 2010, making up the largest segment of YTD sales growth. Heart valve therapy sales amounted to $246.1 million, representing 22.7% growth over last year. Diluted EPS came in at .38 a share (compared with 0.43 in the prior year quarter), a penny short of analyst consensus, but in line with management guidance.

EW is currently awaiting FDA approval for SAPIEN, a new, non-invasive transcatheter heart valve implant that would give them a significant lead over their competitors. Management expects SAPIEN sales of $20-$25 Million within the first three months of launch, and $150 to $250 Million in it’s first year. Because of this heavy dependence on SAPIEN sales, EW stock has proven to be highly sensitive to speculation as evidenced by a 5% drop in price on 10/18/11 following rumor that FDA approval would be delayed by 9 months. Following release, EW’s stock rose 6.21% to $72.00 per share. Since then, the stock has climbed an additional 4% and is currently trading at $75.15.

- Chris Garcia, Junior Analyst
- Deven Gould, Healthcare Sector Head

MCD 3Q Review .. 100 Consecutive Months of Positive Global Comps

McDonalds reported stellar third quarter earnings on Friday before the open. Revenue rose 13.7% to $7.1bn from $6.3bn in the year-ago period. Earnings rose to $1.45 per diluted share, a 12% increase from $1.29 last year. Sales were driven by growth across all areas of the world, and comparable same store sales of 5.0% versus 3.9% consensus.

MCD has increased prices two times this year to offset rising commodity prices (particularly beef), but management commented that prices at supermarkets are rising faster than restaurant prices which provides the company with some cushion. An increasingly diverse menu, with a focus on keeping prices competitive versus peers, has allowed McDonalds to thrive in the current environment – driving in-store traffic and allowing MCD to gain market share.

Jim Skinner, CEO, made some interesting comments regarding the economy and consumer. "We are officially out of the recession, but it hardly feels that way," he said. "Consumers everywhere continue to be cost conscious and hesitant to spend." Estimates are under review but results this quarter support our bullish thesis on shares of MCD. The stock traded up ~3% on the day and has increased ~20% so far this year.

Ian

UASBIG invests in the Albany Community

On Sunday October 23rd UASBIG participated in the Pine Hills community clean up along with deans leadership council and the Pine Hills Neighborhood Association. About 130 University at Albany students were involved with the event that lasted from 9am to 12pm. UASBIG analysts played an important part in the cleanup and Hudson avenue saw great improvement as a result. Thanks to all who participated!

-Susan

Verizon Communications 3Q11 Earnings

Verision reported 3Q 2011 earnings of 49 cents per share, missing the mean street estimate of 56 cents per share. Factors contributing to the miss in earnings were as follows; 7 cents per share for a non-operational charge relating to remeasurement, based on an actuarial valuation of pension plans and a $250 million or 5 cents per share negative impact due to storm-related repair costs and a two week strike affecting the wireline segment.

Revenue in the quarter rose 5.4 percent to $27.9 billion from $26.5 billion a year ago. Total operating expenses were $23.3 billion, an increase of 0.7 percent. Consolidated EBITDA was $8.8 billion, up 19.2 percent year over year. VZ has generated $21.5 billion in cash from cash operating activities through the first 9 months of 2011. Cap-ex totaled $12.5 billion on pace to meet managements full year guidance of 16.5 billion.

The company added an additional 882,000 customers this quarter amounting to a total of 107.7 million connections, an increase of 6.5 percent year over year. VZ also saw 138,000 additional FiOS internet subscribers and 131,000 FiOS TV subscribers. The negative impact of storm-related repair costs and the two week strike affected the wireline segment.

UASBIG tech analysts believe that VZ is positioned to perform well in 4Q11 as well as into fiscal year 2011. VZ was able to deliver impressive 3Q results despite both internal and external turbulence. VZ’s fresh line-up of new smartphones, tablets and data devices as well as a pent-up demand their wireline TV and internet businesses position VZ to deliver strong growth in the fourth quarter.

Shares of Verizon, rose 32 cents Friday, to close at $37.42.

Alcoa Sold on 10/21/2011

We made the decision to sell out of our position in Alcoa Inc. Based on the fact that Alcoa missed 3Q11 earnings and the sentiment around the market for aluminum is depressed, we found that the thesis behind our purchase of Alcoa no longer held true. Alcoa now seems to be a 2-3 year long-term hold situation with very short term volatility, and we felt that is was not in our best interest to maintain our holding.

-Jeremy Pellizzari