I am a major Endo (ENDP) bull. However, I would be remiss in not admitting that it has been one of the market’s most perplexing stocks. ENDP hit a 52-week high of over $18 in the second half of 2018. Investors were excited about the potential for Xiaflex to treat cellulite. Late stage clinical trials were extremely positive. The stock free fell after Q3 2018 earnings were announced. Analysts and investors fretted over the fact that an FDA application was not expected until 2019. Any FDA approval may not arrive until the second half of 2020.
The opioid epidemic has now taken center stage. The number of accidental deaths related to opioids and the number of people addicted to them have been on the rise. Some believe such accidental deaths have been spurred by a proliferation of opioid prescriptions. State attorneys general also claim that drug makers have, in certain instances, fraudulently misrepresented the serious side effects of opioid use. Short sellers have punished the stocks of companies like Johnson & Johnson (JNJ) and Cardinal Health (CAH) that face opioid litigation. Endo, Teva (TEVA) and Mallinkrodt (MNK) have been punished the most, likely because they have the smallest balance sheets.
ENDP remains highly-undervalued, despite slowly settling opioid claims, diversifying its revenue stream, and winning an opioid trial in California. Trump And The GE believes the company has a fiduciary responsibility to buyback shares. That did not happen prior to Q3. The stock still trades under 7x EBITDA making it vulnerable to a takeover from Barbarian #3 – Amazon (AMZN). At the 49:00 minute mark of the above video, Shock Exchange explains:
Amazon is already distributing branded drugs and generics at steep discounts. Endo is one of the biggest … it’s a major player in the generics space, so it can develop generic drugs. It seems to be a natural fit with Amazon. Could you imagine if Endo was allow to sell QWO or market QWO to Amazon’s 200 million prime members? We know that Endo has an opportunity to be a category killer with QWO, and we know they probably wants to grow in the aesthetics space …
The ability is to market QWO and future aesthetics products to Amazon’s 200 million prime members; it’s almost unquantifiable. Then add on to the fact that Endo is highly-undervalued.
Judge Peter J. Wilson recently ruled that opioid manufacturers in California were not liable for the opioid crisis. An An Oklahoma court just reversed a $465 million opioid ruling against Johnson & Johnson (JNJ); however, ENDP still has a low value, despite the decline in opioid liabilities. Stay tuned …
