Endo International: Will Hedge Funds Pile In?

Famed arbitrageur Gordon Gekko squeezes Bud Fox

The fortunes of Endo International are starting to turn. The stock is down about 7% Y/Y, but has bounced over 40% YTD. Albeit, the YTD performance was off a very low base. Those who held on at the lows have been rewarded with a very nice bounce. The stock has also reached an 11 month high. ENDP could rise further as financial markets benefit from earnings momentum, and the potential for Endo to meet or exceed Q2 earnings estimate. Another key date is July 19th when the company presents at the Cantor Dermatology and Aesthetics Summit. If the presentation goes well then ENDP could experience another leg up.

Granted, the company has been punished for its role in the opioid crisis and for product litigation related to testosterone replacement therapy. Opioid lawsuits could be next weigh on the company. I am betting that Endo’s $1.3 billion in cash and future cash flow should be enough to hand future legal pay outs. Its Q1 2018 revenue of $701 million was off over 30% Y/Y. Revenue from generics and pain-related drugs like Percocet and Opana continues to bleed out, while Sterile Injectables are growing at double – digits. However, every dark cloud has a silver lining.


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