Questcor Pharmaceuticals (QCOR): Zacks Rank Buy
Questcor Pharmaceuticals (NasdaqGS:QCOR - News) fights the drama and as its earnings estimates move higher making it a Zanks #1 Rank (Strong Buy).
Company Description
Questcor Pharmaceuticals, Inc., a biopharmaceutical company, provides prescription drugs for the treatment of auto-immune diseases. The company's primary product is H.P. Acthar Gel (repository corticotropin injection), an injectable drug for the treatment of acute exacerbations of multiple sclerosis; infantile spasms in infants and children under two years of age; nephrotic syndrome; and Lupus.
Earnings Estimates Increase
Earnings estimates for the March 2012 quarter have been creeping higher over the last several weeks, moving from $0.25 on 10/21/11 to the current level of $0.41. This move includes a two cent increase in the last week. An increase in earnings estimates this close to the reporting date indicates that analysts believe the consensus was very beatable.
The next quarter has also seen indication of strong growth. The Zacks Consensus Estimate for the June 2012 quarter has moved from $0.30 to $0.48 over the last several weeks.
Earnings Surprises Have Helped
Although there is relatively small number of covering analysts, the company has been able to produce positive earnings surprises in each of the last three quarters. Beats of $0.01, $0.03 and $0.09 respectively have help push the stock higher by an average of 15% following the beats.
Wild Week for QCOR
Monday, January 9, was a good day for QCOR, as shares jumped more than 8% on the heels of an acquisition the drug space that was the tide that raised all ships. On Wednesday, the wind was taken out of the sails as a report that a blog was about to question the company's marketing practices. By the end of the day, the company came out and made a statement about the blog report. Concern about the blog report sent investors rushing to the exits and the stock was down nearly 15% that day.
The report on QCOR will come out next week after the company contacted the publisher to ask for more time to answer the questions. So a keep an eye out for that.
Valuations
The large moves in the stock this week have helped the valuation, but the stock still remains rich. Trading at 41X trailing earnings compared to the industry rate of 12x is tough to swallow. The premium isn't nearly as bad when you look at forward earnings, with QCOR holding a 18X multiple while the industry trades at just under 11x. Other backward looking metrics such as price to book and price to sales also show QCOR trading at a healthy premium.
The Chart
The recent price action has pushed the stock from the low 40's to the mid to low 30's. Knowing that a there is a high probability of a negative report coming out next week may make some investors take shelter in the near term. I am of the belief that the negative news, which hasn't even materialized yet, is fully baked into the stock. Aggressive growth investors rely more on earnings than they do about issues surrounding marketing how insiders have sold stock over the last several months.
Brian Bolan is an Aggressive Growth Stock Strategist for Zacks.com.
This Week's Aggressive Growth Zacks Rank Buy Stocks
Select Comfort Corporation (NasdaqGS:SCSS - News) six consecutive positive earnings surprises have pushed the stock to double its price since June of 2010. Rising estimates in 2013 make this stock a Zack Rank #1 (Strong Buy).
DXP Enterprises, Inc. (NasdaqGS:DXPE - News) consistently beats the Zacks Consensus Earnings Estimate and is seeing estimates increase for the current quarter.
Vitamin Shoppe, Inc (NYSEArca:VIS - News) consistently provides positive earnings surprises and the stock remains a Zacks #1 Rank (Strong Buy).
InnerWorkings, Inc. (NasdaqGS:INWK - News) is a Zacks #1 Rank (Strong Buy), but don't be afraid of the low volume.
QUESTCOR PHARMA (QCOR): Free Stock Analysis Report
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