Why Auxilium Pharmaceuticals, Inc. Shares Crashed Today

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 Auxilium Pharmaceuticals  (NASDAQ: AUXL  ) have lost roughly 18% of their value today following the company's guidance reduction last night.

So what: Auxilium snuck in several hours after the closing bell on Tuesday to shred its earlier guidance by a fairly substantial amount. Its original full-year revenue guidance had been in a range of $450 million to $490 million, and its original adjusted earnings projection had ranged from $45 million to $50 million, which works out to earnings of $0.91 to $1.01 per share based on the company's current share count. However, its new full-year guidance anticipates revenue in the $380 million to $420 million range, with a new bottom-line guidance range that starts at a $15 million loss and ends at breakeven, working out to a loss per share of $0.30 to breakeven. Analysts had expected Auxilium's full-year revenue to reach $484.1 million and had sought $0.96 in EPS.

Now what: This is an ugly revision, make no mistake. Auxilium blames the shortfall on low revenues from its Testim testosterone gel, which had brought in $45.5 million in the first quarter of 2013 but should only drive $11 million to $13 million in revenue for the same quarter this year. Investors don't want to see excuses, they want to see results, and Auxilium's results are, well, not good. The company might reverse its woes later in the year, but it seems more likely that there's more pain in store. I'd keep my distance for the time being.

Invest in the next wave of health care innovation
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And the technology behind is poised to set off one of the most remarkable health care revolutions in decades. The Motley Fool's exclusive research presentation dives into this technology's true potential, and its ability to make life-changing medical solutions never thought possible. To learn how you can invest in this unbelievable new technology, click here now to see our free report.


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.

DocumentId: 2937812, ~/Articles/ArticleHandler.aspx, 7/24/2014 7:57:45 AM

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...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement