Wednesday, August 7, 2013

Seeking Alpha: Endo Health Has A Lot Of Work To Do

How do you ruin a specialty pharmaceutical business? Take a ridiculously lucrative stream of free cash flow generated by a strong pain franchise and reinvest it badly-reasoned acquisitions in the device space. To be fair, though, "ruin" in the case of Endo Health Solutions (ENDP) still means a stock that has climbed almost 150% over the past ten years and left both the S&P 500 and drug companies like Teva (TEVA) and Mylan (MYL) in the dust.

The relevant question now is where Endo Health goes from here. The company's one-time fortress of pain medications is now due to erode away in the face of generic competition, while the company's device business has not only failed to generate good cash flows but has actually created potentially large product liability claims. New management has already laid out bold cost-cutting moves and explicitly intends to close multiple M&A transactions. At this point, then, this stock is basically a referendum on management - if you believe they can acquire a better future for Endo, you probably like the stock. If you believe Endo won't be able to acquire enough growth, it probably looks like a hold at best.

Please read the full article here:
Endo Health Has A Lot Of Work To Do

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