Endo Pharmaceuticals (ENDP) has risen by over 2.5 times since late May when Shocking The Street discussed the company’s growth prospects. The investment community ascertained the spike was based on “no news.” The challenge for the company was to prove the run-up was real. Q2 financial results may have gone a long way to proving the company could (1) offset its sagging generics business with new products and (2) stabilize operating income margins and cash flow long enough to reap the benefits of potential new product launches.

Sterile Injectables and Xiaflex both demonstrated double-digit revenue growth, which was exciting. An EBITDA margin north of 40% was also a key achievement. Perhaps the most-important news was that management confirmed it could could announce results of Phase 3 clinical trials for a key drug in Q4 2018 – at least a quarter earlier than expected. This implied the clinical trials were going well, improving the chances of a successful drug launch.

ENDP is up over 25% just prior to earnings, yet 8% off its 52-week high. Goldman Sachs (GS) recently upgraded the stock to neutral from sell, but called the valuation “stretched.” Wednesday September 12th Endo gave an extremely positive update at the Morgan Stanley Healthcare Conference. Management confirmed its key drug could disrupt the $15 billion aesthetics market. Read more:



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