Shire: William Blair Gives Quick Take On Third-Quarter Earnings; Maintains Market Perform

In a research report issued late Friday, William Blair analyst Tim Lugo assigned a Market Perform rating on Shire PLC (NASDAQ:SHPG) with a price target of $250, following the company’s third-quarter earnings. Revenue of $1.597 billion, up 32% yearover- year, was above the consensus of $1.453 billion and ahead of William Blair estimate of $1.469 billion.

Lugo wrote, “The strength of results was attributed to the gastroenterology (up 20% year-overyear) and human genetic therapy franchise (up 66% year-over-year) sales. In gastroenterology, Lialda was up 23% quarter-over quarter and 24% year-over-year. Elaprase sales of $169 million, up 31% year-over-year, were above our estimate of $148 million and the consensus of $141 million. In addition, Cinryze, acquired as part of the ViroPharma deal, provided another strong quarter, with revenue of $145 million, up 12% quarter-over-quarter. The neuroscience/ADHD franchise was also up 18% year-over-year with Vyvanse revenue at $355 million, higher than our estimate of $351 million and consensus of $344 million. On the bottom line, non-GAAP SG&A expense was $408 million during the quarter, above our $398 million estimate and $386 million consensus. Non-GAAP R&D expense of $210 million was below our estimate of $218 million and consensus of $224 million. The company posted a lower tax rate of 17.6%, which was better than our estimate of 19%. Shire generated non-GAAP free cash flow of $575 million in the quarter, up 48% year-over-year.”

The analyst concluded, “We continue to rate shares of Shire a Market Perform as this saga winds down; however, we view Shire as one of the highest-quality companies in the sector. We will wait until the completion of the third-quarter call to hear additional details on any lasting impact possible through employee turnover caused by the cancellation of the AbbVie deal and organic growth drivers for the future.”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Tim Lugo has a total average return of -5.1% and a 47.1% success rate. Lugo is ranked #2906 out of 3343 analysts.

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