(WPI) Watson Pharmaceuticals, Inc. – Value – Zacks Rank Buy

April 25th, 2009

Watson Pharmaceutical Inc. (WPI), a generic and branded drug manufacturer, has surprised on earnings 3 out of the last 4 quarters by an average of 5.34%. Consensus estimates are rising going into the Apr 30 first-quarter earnings announcement. WPI has a forward P/E of 12.64.

Company Description

Watson Pharmaceuticals manufactures brand name and generic drugs. The company focuses on the areas of Urology, Women’s Health and Nephrology/Medical.

Watson Beats in the Fourth Quarter 2008

On Feb 19, Watson Pharmaceuticals reported better than expected fourth quarter results which surprised on analysts’ estimates by 6%. Adjusted net income was $60.6 million, or 53 cents per share, which was 3 cents higher than the consensus.

Revenue climbed 3% to $645.2 million from the fourth quarter of 2008. The company said it saw strong revenue in all divisions.

Watson was bullish about opportunities in 2009. It provided 2009 EPS guidance of $2.18 to $2.28 per share.

Consensus Estimates Rise

In another bullish sign, covering analysts have been raising estimates as the first quarter earnings announcement, scheduled for Apr 30, approaches.

The full-year 2009 consensus estimates are up 6 cents in the last 2 months to $2.26 a share with 1 analyst raising in just the last week. This is at the high end of the company’s guidance range.

First quarter estimates have climbed 8.7% in the last 90 days to 50 cents.

Value Fundamentals

Watson Pharmaceuticals is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 12.64 and a price-to-book of 1.49. WPI also has a solid 1-year return on equity (ROE) of 11.63%.

Zacks Investment Research
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More on this topic (What's this?)
WPI: Earnings Announcement 2009-1Q (Gauging Corporate Financial Reports, 4/30/09)
WPI: Look Ahead to March 2009 Quarterly Results (Gauging Corporate Financial Reports, 4/13/09)
Inflation - WPI and CPI demystified (Genesis Financials, 5/1/09)
Is Inflation in India at 0.5% or 10% - The WPI and CPI Debate (Stock Market and Economic Analysis, 5/17/09)
Read more on Watson Pharmaceuticals at Wikinvest

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