Barr Pharma shares down 23 pct after earnings
NEW YORK |
NEW YORK (Reuters) - Barr Pharmaceuticals Inc BRL.N reported disappointing first-quarter profit on weak U.S. sales and slashed its full-year forecast on Thursday, driving its shares down 23 percent to their lowest levels since late 2004.
Sales of the company's generic oral contraceptives fell short of expectations, and results were also hurt by surprising competition and pricing pressure on its new generic version of a blockbuster osteoporosis drug. Sales of its Plan B emergency contraceptive were also lower than expected.
Barr, one of the largest U.S. makers of generic drugs, reduced its 2008 outlook less than three months after issuing a forecast that also disappointed the market.
"It's hard to imagine how they could get this so wrong in so many areas of their business in only the first quarter," Morningstar analyst Brian Laegeler said. "I think there's a little bit of credibility lacking right now in the financial guidance."
Goldman Sachs analyst Randall Stanicky cut his rating on Barr shares to "neutral" from "buy," citing the "weak" quarterly results.
Excluding special items, Barr earned 57 cents per share in the first quarter, far short of analysts' average forecast of 78 cents, according to Reuters Estimates.
Net income rose to $23 million, or 21 cents per share, from $11.6 million, or 11 cents per share, a year earlier.
Revenue rose 2 percent to $608 million, and was "weak across the board," according to Wachovia analyst Michael Tong.
Barr Chairman and Chief Executive Bruce Downey said results in the first quarter "did not meet our expectations," but he expects "results will improve in the second half of the year and demonstrate the value of expanding our operations and markets outside the United States."
Generic product sales were $469 million in the quarter, down slightly from $471 million a year earlier. U.S. generic sales fell 15 percent to $261 million.
Sales of generic oral contraceptives, Barr's biggest single generic category, fell nearly 18 percent to $93 million, reflecting lower volume in several products due to lower market share, the company said.
Rival Watson Pharmaceuticals Inc WPI.N, now run by former Barr executive Paul Bisaro, is gaining market share in the category, according to Cowen & Co analyst Ken Cacciatore.
Sales of Barr's brand-name products rose 8 percent to $96 million. Higher sales of its Seasonique oral contraceptive helped offset generic competition for its Seasonale contraceptive. Plan B sales were weaker than expected because wholesalers boosted their inventory at the end of 2007 in anticipation of a price increase, Barr said.
Generic drug sales abroad rose 27 percent to $208 million, helped by the weak dollar and strong performances in Germany, Russia and Poland. Barr gained an international presence when it bought Croatia's Pliva in 2006.
For the full year, the New Jersey-based company cut its earnings pe share forecast to a range of $2.75 to $3.05, down from a February forecast of $3.05 to $3.35.
In cutting its outlook, Barr cited lower-than-expected U.S. generic revenue due to the timing of drug launches, lower gross profit margins due to a shift in product mix, and higher investments in research and development, on top of the problems hurting the first-quarter performance.
Downey told analysts on a conference call that Barr expects improvement in the second half of the year and that 2009 and 2010 should be among the strongest years in the company's history.
Barr shares were down $11.65 to $38.00 in afternoon trade on the New York Stock Exchange. They fell as low as $37.42 earlier in the session.
(Reporting by Lewis Krauskopf; additional reporting by Debra Sherman in Chicago; Editing by John Wallace and Gerald E. McCormick)
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