Amneal Pharmaceuticals (NASDAQ:AMRX) continues its impressive track record of revenue and earnings growth, with top-and-bottom-line beats in the most recent quarter. Although the company did fight allegations over its involvement in the U.S. opioid crisis, it doubled its share value over the past year, and despite a decisive run, the stock trades at a discount to peers in the industry, making this a compelling option for investors looking for a solid option in the pharmaceutical industry.
Amneal’s Robust Pipeline & Recent Settlement
Amneal Pharmaceuticals develops, manufactures, and distributes over 280 diverse generic and specialty pharmaceuticals. The specialty segment is focused on providing branded pharmaceuticals primarily for the central nervous system and endocrine disorders, with a development pipeline prioritizing unmet medical needs. Amneal’s AvKARE unit distributes pharmaceuticals and other products to the U.S. federal government, retail, and various institutional markets.
The company has reported on its litigation settlement over its alleged role in the U.S. opioid crisis, paying a charge of $94 million in Q1 2024 as part of the agreement. The settlement calls for the company to pay $92.5M in cash and provide $180M in naloxone nasal spray over ten years. This settlement is subjected to a sufficient number of parties opting for a definitive agreement. This emphasizes the company’s commitment to respond to the opioid crisis through enhanced naloxone nasal spray access, a generic version of OTC NARCAN HCI Nasal Spray frequently used to help treat opioid drug overdoses.
Amneal’s Recent Financial Results & Outlook
The Company reported results for the first quarter of 2024, exceeding analysts’ expectations. Revenue of $659.19 million beat consensus estimates of $619.03 million and marked an 18% year-over-year surge from $558 million. This increase is attributed to a 14% growth in generic revenues, a 15% rise in specialty revenues, and a significant 33% boost in AvKARE revenues.
However, while revenue showed positive growth, the first quarter marked a GAAP net loss of $92 million for the company due to a pre-tax settlement charge of $94 million relating to a national opioid agreement. Despite this, the company posted adjusted diluted earnings per share of $0.14, surpassing analyst’s estimates of $0.09.
Management has reaffirmed its full-year 2024 financial forecasts. The expected net revenue is between $2.55 billion and $2.65 billion. Adjusted EBITDA is forecasted to go between $580 million and $620 million, with the adjusted diluted EPS projected to range between $0.53 and $0.63.
What Is the Price Target for AMRX Stock?
Analysts following the company have been bullish on the stock. For instance, Truist analyst Les Sulewski recently raised the price target on the shares from $7 to $9 while keeping a Buy rating, noting the company’s opioid settlement, double-digit revenue growth, and new product launches.
Overall, Amneal Pharmaceuticals is rated a Strong Buy based on four analysts’ aggregate recommendations and price targets recently issued. The average price target for AMRX stock is $8.25, representing a potential 28.50% upside from current levels.
The stock has been riding a solid uptrend, though the ride has been volatile at times, as evidenced by its beta of 1.71. The shares trade at the upper end of their 52-week price range of $2.29 – $7.25, though they appear to be relatively undervalued based on a P/S ratio of 0.55x compared to the Specialty & Generic Drug Manufacturers industry average of 2.10x.
Final Analysis on AMRX
Amneal Pharmaceuticals has exhibited a strong performance with promising financials and an ambitious outlook for 2024. The company’s robust product pipeline, from generic to specialty pharmaceuticals, has effectively bolstered revenue growth despite its recent settlement over opioid-related litigation. The stock trades at a relative discount, further solidifying its position as a compelling investment in the pharmaceutical sector.
