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Why ANI Pharmaceuticals Inc. Shares Shot Higher

By Sean Williams - Feb 18, 2014 at 1:59PM

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ANI Pharmaceuticals is off to the races after reporting its fourth-quarter earnings results. Can shares head higher or should investors head for the exits?

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 (ANIP 0.72%), a specialist in the development and marketing of branded and generic pharmaceutical products, jumped as much as 15% after the company reported fourth-quarter earnings results.

So what: Given that ANI Pharmaceuticals is a smaller company (with a market cap just above $200 million) there were no Wall Street estimates to match up to, allowing investors to push its share price higher or lower based solely on the raw results. For the quarter, revenue rose 98% to $10.5 million, from $5.3 million in the prior year. Net income tallied $3.4 million, or $0.35 per share, and reversed a year-ago loss of nearly $1.2 million. ANI noted that prescription sale revenue spiked 170% during the quarter to $8.8 million, primarily due to better sales and a higher price for its Esterified Estrogens with Methyltestosterone Tablet, or EEMT. During the quarter, ANI also announced the acquisition of 31 generic products from Teva Pharmaceutical (TEVA 3.18%) for $12.5 million, bringing its current and developing pipeline to 38 products.

Now what: Simply put, this is what happens when a company grows its top line organically and turns losses into profits. It's especially beautiful because we get to witness the reaction of shareholders who have not been clouded by Wall Street's "guesstimates." If ANI is already profitable from its EEMT product, chances are good that the addition of Teva's generic products is only going to further boost that profitability in 2014. ANI has already had quite the run, so I'm a bit skeptical about insinuating that it could head even higher, but that isn't out of the question.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool recommends Teva Pharmaceutical. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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Stocks Mentioned

ANI Pharmaceuticals, Inc. Stock Quote
ANI Pharmaceuticals, Inc.
$34.87 (0.72%) $0.25
Teva Pharmaceutical Industries Limited Stock Quote
Teva Pharmaceutical Industries Limited
$11.03 (3.18%) $0.34

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