Why Santarus' Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of specialty biotechnology firm Santarus (Nasdaq: SNTS  ) have had a wild ride today with its shares losing as much as 34% earlier this morning after reporting its second-quarter earnings results.

So what: For the quarter, Santarus reported a 77% increase in revenue to $47.2 million while net income grew 27% to $3.4 million, or $0.05 per share. Unfortunately, Santarus' profits fell $0.03 shy of what Wall Street had expected despite the robust growth. Santarus' guidance calls for the company to hit about $200 million in revenue in fiscal 2012, which is in line with the Street's forecast, and net income of $8 million to $11 million, or what amounts to $0.13 to $0.18 in EPS, more or less in line with analysts' current range of $0.15 to $0.18.

Now what: it's still early in the game, but Santarus showed remarkable growth for its three commercial drugs. Diet-control drugs Glumetza and Cycloset, targeted at type 2 diabetes patients, saw total prescriptions increase by 34% and 100%, respectively, while Fenoglide, which assists in cholesterol reduction, had growth of 17% in total prescriptions. In addition to these commercial drugs, Santarus submitted a new drug application for its ulcerative colitis drug, Uceris, and has multiple other clinical phase trials under way. Personally, I see today's earnings miss and drop as an overreaction and would take a much closer look at Santarus as a potential buy.

Craving more input? Start by adding Santarus to your free and personalized watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1977461, ~/Articles/ArticleHandler.aspx, 10/25/2014 5:33:17 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement