Why Salix Pharmaceuticals' Shares Popped

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

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 gastrointestinal-focused drug and medical device company Salix Pharmaceuticals (Nasdaq: SLXP  ) rose as much as 12% today after the company reported much better-than-expected third-quarter earnings results.

So what: For the quarter, Salix reported a 27% increase in total revenue to $185.1 million and a profit of $0.95 per share. Revenue came in slightly below the Wall Street consensus of $187.2 million, but absolutely trounced EPS estimates by $0.26. One of the big reasons for that beat are sales of Xifaxan, a treatment for travelers diarrhea and overt hepatic encephalopathy, which rose 43% over the previous year to $137.9 million. Not everything was peachy, however, as research firm Brean Capital pointed out when it lowered its price target on Salix to $44 from $53 and noted that higher costs and the possibility of additional trials for Relistor due to concerns from the FDA could hamper results.

Now what: It's pretty hard to argue against a $0.26 earnings beat, but it's a tad bit worrisome that 75% of Salix's revenue is tied solely to Xifaxan. As long as Xifaxan is on a roll, Salix should be as well, but I'd really like to see its three newer drugs -- Relistor for opioid-induced constipation, Deflux for the treatment of vesicoureteral reflux, and Solesta for the treatment of fecal incontinence -- step up to the plate and diversify Salix's product offerings. In the meantime, I'm happy adding Salix Pharmaceuticals to My Watchlist.

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

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.

Compare Brokers

Fool Disclosure

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: 2102645, ~/Articles/ArticleHandler.aspx, 10/26/2016 11:38:11 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...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
SLXP.DL $0.00 Down +0.00 +0.00%
Salix Pharmaceutic… CAPS Rating: ***