Why ANI Pharmaceuticals Inc. Shares Briefly Slipped

ANI Pharmaceuticals reports impressive first-quarter growth, but investors find a flaw anyway.

May 5, 2014 at 1:16PM

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 ANI Pharmaceuticals (NASDAQ:ANIP), a developer of generic pharmaceutical products, dipped as much as 13% after reporting its first-quarter earnings results before the opening bell. Shares have since recovered and are now down less than 4% as of this writing.

So what: For the quarter ANI Pharmaceuticals reported an increase in revenue of 96% to $10.9 million, as well as net income of $3.4 million, or $0.33 per share, compared to just $0.3 million in the prior year period. As noted in its report, a 150% increase in net prescription sales accounted for much of the gains and was offset by a 7% decrease in contract sales. Its top line received a nice boost from the acquisition of 31 generic assets from Teva Pharmaceutical. By comparison, the two-analyst estimate on Wall Street had called for just $0.32 in EPS, but a slightly higher $11.4 million in revenue.

Now what: Following a sextupling in ANI's share price since the summer of last year, I can certainly see why investors would be displeased with its "revenue miss." But ANI is also beginning to benefit from its generic asset acquisition which has made it quite profitable. I'd consider myself to be at a bit of a stalemate here in that I'm drawn in by the allure of double-digit growth and the rising presence of generic drug demand, especially with Obamacare lowering the rate of uninsured in this country. However, I'm also a bit taken back by ANI's forward P/E of 23 and existing share price appreciation which may have already baked in that optimism. ANI Pharmaceuticals is a company I'd consider getting on your watchlist for reference, but I'd suggest it's not a particularly intriguing value at the moment.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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