Please ensure Javascript is enabled for purposes of website accessibility

Takeda Pharmaceutical Raises Its Profit Outlook

By Jim Crumly - Feb 4, 2020 at 2:56PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The integration of Shire is progressing more quickly than the company had expected.

Shares of Japanese drugmaker Takeda Pharmaceutical (TAK 0.92%) were trading 3% higher Tuesday after the company reported a jump in revenue and core operating profit in its fiscal third quarter, reflecting its acquisition of Shire in January 2019, and raised its profit guidance for the year. Revenue was up 83% to 2,520 billion Japanese yen, or $23.0 billion. Excluding the acquisition, revenue declined by 1.2%. Earnings per share were 27 yen or $0.25, up from a loss of 183 yen ($1.67) in the period a year ago.

Takeda operates in five segments, and management reported sales gains in four of them, led by gastroenterology with 10% growth. That's now the company's largest business, accounting for 21% of sales. The rare disease segment, which provided 20% of sales, was the sole decliner -- a sales drop of 11% that was attributed to intensifying competition. Sales of drugs outside the company's core areas also fell 12%, but the management is expecting to divest $10 billion of non-core assets, and is only about halfway through that plan.

Hand placing a block on a stack with pharmaceutical symbols.

Image source: Getty Images.

Investors were pleased to hear management say that cost savings from the Shire acquisition are being realized more quickly than expected, after what has thus far been a cool reception from the markets to the $62 billion deal. Takeda now expects to book an operating profit of $91 million for the year; three months ago, it was forecasting a $1 billion loss.

At a market capitalization of $63 billion, Takeda is one of the world's biggest pharmaceutical companies, but because it first listed its American Depositary Shares on the New York Stock Exchange just over a year ago, this high-yielding stock remains relatively unknown to investors in the U.S.

Jim Crumly has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Takeda Pharmaceutical Company Limited Stock Quote
Takeda Pharmaceutical Company Limited
TAK
$14.25 (0.92%) $0.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.