Par Pharmaceutical Earnings Preview

Investors hope Par Pharmaceutical (NYSE: PRX  ) will top analyst estimates once again after beating predictions by $0.08 in the previous quarter. The company will unveil its latest earnings on Wednesday, Nov. 2. Par Pharmaceutical, through its wholly owned subsidiary, is engaged in the development, manufacture, and distribution of generic pharmaceuticals and branded pharmaceuticals in the United States.

What analysts say:

• Buy, sell, or hold?: The majority of analysts back Par Pharmaceutical as a buy. But with 66.7% of analysts rating it a buy, Par Pharmaceutical is still below the mean analyst rating of its nearest 10 competitors, which average 67.9% buys. Analysts like Par Pharmaceutical better than competitor Mylan Laboratories overall. Out of 17 analysts, 11 rate Mylan Laboratories a buy compared to six of nine for Par Pharmaceutical. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.
• Revenue forecasts: On average, analysts predict $210 million in revenue this quarter. That would represent a decline of 10.4% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.74 per share. Estimates range from $0.68 to $0.77.

What our community says:
CAPS All-Stars are solidly behind the stock with 91.8% giving it an "outperform" rating. The community at large agrees with the All-Stars with 86.8% assigning it a rating of "outperform." Fools are gung-ho about Par Pharmaceutical, though the message boards have been quiet lately with only 85 posts in the past 30 days. Despite the majority sentiment in favor of Par Pharmaceutical, the stock has a middling CAPS rating of three out of five stars.

Management:
Revenue has fallen for the past three quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q2	Q1	Q4	Q3
Gross Margin	44.2%	47.1%	42.0%	44.1%
Operating Margin	7.9%	(59.5%)	10.9%	17.3%
Net Margin	4.0%	(46.8)	7.7%	13.0%

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