Endo Pharmaceuticals (ENDP) delivered a Q2 revenue and earnings beat last week, and the fireworks flew. ENDP rose as much s 38% on the day. The stock has pulled back a bit since earnings, but is still up over 80% Y/Y. That said, there is currently a war over drug prices. In my opinion, the U.S. economy is not as strong as President Trump would have the populace believe:
After trillions of stimulus during the Obama administration and the so-called “wealth effect” orchestrated by former Fed Chairman Ben Bernanke, does anyone really want to believe we could still be headed for recession? I have long held the theory that such stimulus inured mostly to the benefit of the investor class. Is that stimulus trickling down to the masses?
… I personally believe that within the economic data there are signs the economy is not as strong as the government would have the public believe. In my opinion, long-term unemployment, corporate cash stockpiles and lackluster growth in personal consumption expenditures (“PCE”) likely point to signs of a recession.
A stagnant economy makes rising drug prices and healthcare costs even more devastating to the public. Endo is right in the middle of that conversation. The government is tamping down on opioid prescriptions, which has hurt sales of pain-related drugs. Generic drug revenue has been hurt by faster approval of new drugs as well.
Ultimately, ENDP delivered fireworks in Q2. The core business appears to be stabilizing. Management confirmed it expected to accelerate timelines for a key drug. According to Shocking The Street, a premium investment service the Shock Exchange runs in conjunction with Seeking Alpha, investors should buy ENDP now before the fireworks start again. Read more: