Why Akorn Inc. Shares Popped

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Akorn, Inc. , a branded and generic pharmaceutical drugmaker, rose as much as 15% after reporting better-than-expected second-quarter earnings results.

So what: As you might imagine from the move higher, investors are pretty pleased with Akorn for delivering a 22% increase in revenue to $77 million and an adjusted profit of $0.14 per share. Comparatively speaking, the Street had only been looking for the company to report a profit of $0.12 per share on $75.6 million in sales. The results were still mixed, though, with sales volumes of new and existing products providing the revenue bump, but average selling prices of existing items and weaker sales in its Indian subsidiary weighing them down. Still, Akorn was able to reaffirm its full-year guidance, calling for revenue in a range of $305 million to $315 million with EPS of $0.53-$0.55. Both are in line with Wall Street's forecast.

Now what: If you're the type of investor that wishes you'd gotten in on Pfizer back in the 1990s, then Akorn could be just the company you're looking for. Akorn is a hybrid pharmaceutical company, like Teva Pharmaceutical, in that it develops exclusive branded drug, as well as maintains a rapidly growing generic drug portfolio. Keep in mind that Akorn earlier this year stated its intentions to bring 39 branded and generic drugs to market between 2013 and 2015 representing a total market value of $3 billion. There could potentially be a lot of upside left in this company if its margins don't get too pressured by competition abroad. I'd strongly recommend adding it to your watchlist and keeping an eye on Akorn.

It's no secret that most biotech stocks have been soaring recently, but the best investment strategy is to pick great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" not only shares stocks that could help you build long-term wealth, but also winning strategies that every investor should know. Click here to grab your free copy today.

The article Why Akorn Inc. Shares Popped originally appeared on Fool.com.

Fool contributor  Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle  @TMFUltraLong . Try any of our Foolish newsletter services  free for 30 days . We Fools may not all hold the same opinions, but we all believe that  considering a diverse range of insights  makes us better investors. The Motley Fool has a  disclosure policy .

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading