In my opinion, Endo International (ENDP) is one of the more perplexing names in the stock market. Just when you think you have a bead on the company’s earnings and the story, the narrative suddenly changes. When you think you have the stock properly valued, investors and Wall Street analysts suddenly have a different spin and assign value much different from yours. I understand how irrational markets can be, but at some point ENDP should trade based on its expected revenue and earnings growth. It practically has to, right?
The fact that the lion’s share of the shares outstanding are owned by institutions should be a good thing. I would expect institutions to be more sophisticated than retail investors. I would also expect them to assign value to ENDP based on some type of math related to revenue, EBITDA, earnings or cash flow. I understand these types of metrics. However, sentiment or how someone feels about a stock are a lot more nebulous.
That said, ENDP has taken me on a wild ride over the past year. The shares reached a 52-week high of $18.50 in November 2018 just prior to reporting Q3 2018 earnings. The stock sold off immediately after Q3 earnings and appeared to have bottomed in the $7 range in late December. The sell off was inexplicable, given a strong Q3 2018 earnings report. ENDP has been volatile for most of 2019. Read more: