Endo International (ENDP) remains one of the market’s most perplexing stocks. Policymakers, Wall Street analysts and the Federal Reserve have been manipulating stocks to the upside over the past decade. Whenever financial markets have faltered, the Fed’s Ben Bernanke, Janet Yellen and Jerome Powell have come to the rescue by providing liquidity to the market or cutting interest rates. Analysts and policymakers have cheered them on in the process.
Earnings fundamentals no longer matter. The market now trades on sentiment or “what someone says.” The problem for Endo is that is also works in reverse. Endo has consistently delivered strong earnings for several quarters. However, after Q3 2018 earnings were released, analysts turned bearish on the stock. They raised issues over the prospects of certain branded drugs in its pipeline and exposure to opioid litigation. The fact that Endo’s revenue growth and EBITDA margins bested other generic players like Teva (TEVA) and Mylan (MYL) got lost in the sauce. The constant criticism from naysayers and short sellers drove ENDP from a high of just over $18 in Q3 2018 to under $2 in Q3 2019. At one point the stock traded at less than 1x earnings … due to fear mongering and because analysts said so. That said, ENDP shorts are getting cooked. Read more: