Watson Pharmaceuticals Earnings: Profit Margins Expand on Solid Quarter

Watson Pharmaceuticals Earnings Cheat Sheet for the First Quarter

Results: Net income for the pharmaceutical company fell to $44.8 million (36 cents/share) vs. $69.8 million (56 cents/share) a year earlier. A decline of 35.8% from the year earlier quarter.

Revenue: Rose 2.3% to $876 million YoY.

Actual vs. Wall St. Expectations: Excluding items, the company posted earnings of 89 cents per share, above analysts’ estimates of 86 cents a share.

Quoting Management: “As demonstrated by the first quarter results announced today, Watson had a very solid start to 2011,” said Paul Bisaro, President and CEO. “In our Global Generics business, revenue grew 10 percent during the quarter reflecting strong organic growth, and we expanded our adjusted gross margin by 1.6 percentage points.”

Key Stats: The company has now seen net income fall in each of the last four quarters. In the fourth quarter of the last fiscal year, net income fell 67.8% while the figure fell 59.2% in the third quarter of the last fiscal year and 33.2% three quarters ago.

Gross margins grew 6.9 percentage points to 48%. The growth appeared to be driven by falling costs, as the figure fell 9.7% from the year earlier while revenue rose 2.3%.

Over the last five quarters, revenue has increased 22.9% on average year over year. The biggest increase came in the third quarter of the last fiscal year, when revenue rose 33.3% from the year earlier quarter.

Competitors to Watch: Mylan Inc. (NASDAQ:MYL), Novartis AG (NYSE:NVS), Par Pharmaceutical Companies, Inc. (NYSE:PRX), Pfizer Inc. (NYSE:PFE), Impax Laboratories, Inc. (NASDAQ:IPXL), Lannett Company, Inc. (AMEX:LCI), Teva Pharmaceutical Industries Ltd (NASDAQ:TEVA), Columbia Laboratories Inc. (NASDAQ:CBRX), Perrigo Company (NASDAQ:PRGO), and Johnson & Johnson (NYSE:JNJ).

Today’s Performance: Shares of WPI are trading at $59.41 as of April 27, 2011 at 8:27 AM ET, down .3%from the previous close.


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