Analysts are weighing in on drug maker Akorn, Inc. (NASDAQ:AKRX) and clothes maker G-III Apparel Group, Ltd. (NASDAQ:GIII), as both stocks were extremely volatile today following earnings announcements.
Shares of Akorn jumped nearly 41% today after the company reported preliminary fourth-quarter results, with revenues of ~$985 million which were well above consensus estimate of $972.2 million. Joining the party was Nomura analyst Shibani Malhotra, which reiterated a Buy rating on the stock, with a price target of $42, which implies an upside of 59% from current levels.
Malhotra commented, “Akorn detailed that revenues and gross margins were negatively affected by the decision to include the ~$14mn impact of costs associated with competitor pricing actions, which had been excluded from prior guidance. Excluding this impact, revenues would have been $999mn, gross margins would have been 61.8% and EPS would have been ~$2.00. […] Encouragingly, Akorn provided initial 2016 guidance ahead of our expectations, with the top-end of the revenue and EPS range approaching current consensus estimates. Akorn expects 2016 EPS of $2.10–2.20 on revenues of $1,060–1,080mn, and we note that as, we expected, potential new approvals are excluded from guidance.”
“We view Akorn’s ability to provide preliminary 2015 financials as an indication that the company is progressing towards filing the delinquent 2014 and 2015 financials by the May 9 Nasdaq deadline and were encouraged by CFO Duane Portwood’s statement in the press release that Akorn’s internal 2014 restatement work is complete and that he is pleased with the progress to date with the audit effort,” the analyst continued.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Shibani Malhotra has a total average return of -9% and a 39.3% success rate. Malhotra has a -27% average return when recommending AKRX, and is ranked #3512 out of 3820 analysts.
Out of the 7 analysts polled by TipRanks (in the past 3 months), 6 rate Akorn stock a Buy, while 1 rates the stock a Hold. With a return potential of 54.5%, the stock’s consensus target price stands at $40.86.
G-III Apparel Group, Ltd.
Shareholders of G-III Apparel are having a rough day as the company’s stock is down by 20%, after the company provided FY17 guidance well below expectations.
In reaction, Piper Jaffray analyst Erinn Murphy reduced the price target for the stock from $58 to $51, while keeping the rating at Overweight.
Murphy commented, “While we firmly believe a miss to this level should have been preannounced, we do believe the miss was weather related which impacted Wilson’s (two-thirds of their sales are coats) and softer trends at wholesale for outerwear caused the $50M sales shortfall. On the call, mgmt. commented that outside of outerwear, other businesses (dresses, suiting, accessories) were up HSD/LDD and this trend has continued QTD in Q1.”
“The bottom line, the structural story for GIII is unchanged. The biggest shortfall for Q4 was outerwear (40% of sales) which has lingering impacts in FY17 and the incremental investments behind the new growth vehicles of Tommy Hilfiger & Karl Lagerfeld which combined are characterized as being $1.5B incremental revenue opportunity,” the analyst added.
According to TipRanks.com, analyst Erinn Murphy has a total average return of -10% and a 40% success rate. Murphy has a 5.6% average return when recommending GIII, and is ranked #3690 out of 3820 analysts.