The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Watson Pharmaceuticals beat slightly on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share expanded.
Margins dropped across the board.
Watson Pharmaceuticals notched revenue of $1.29 billion. The 18 analysts polled by S&P Capital IQ foresaw sales of $1.26 billion on the same basis. GAAP reported sales were 19% higher than the prior-year quarter's $1.08 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $1.35. The 21 earnings estimates compiled by S&P Capital IQ predicted $1.29 per share. GAAP EPS of $0.60 for Q3 were 11% higher than the prior-year quarter's $0.54 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 43.7%, 120 basis points worse than the prior-year quarter. Operating margin was 10.0%, 400 basis points worse than the prior-year quarter. Net margin was 6.0%, 30 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $1.48 billion. On the bottom line, the average EPS estimate is $1.54.
Next year's average estimate for revenue is $5.62 billion. The average EPS estimate is $5.87.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 202 members out of 224 rating the stock outperform, and 22 members rating it underperform. Among 75 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 70 give Watson Pharmaceuticals a green thumbs-up, and five give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Watson Pharmaceuticals is outperform, with an average price target of $90.71.
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