EPS Reddit Mentions | ChartExchange

**BLUF**: Amneal Pharmaceuticals (AMRX) is a pharmaceutical company that is poised for a significant upside following a slew of new drugs approved by both the FDA and China. I wanted to share my bullish thesis on why AMRX looks like a strong investment opportunity right now.
I want to disclose that I remain fully convinced this stock will continue appreciating in value, even after making a significant amount of money form it so far. I purchased 2,500 shares on April 19 at $1.62 per share (166% gain) and 546 contracts (x100) of the Dec 15 '23 $5 calls, which are now worth 0.45 per contracts (128% gain).
So how did I know Amneal was primed to pop? Huge credit goes to my girlfriend - she's a nurse practitioner and tipped me off in April about a drug that was being discontinued by one of Amneal's competitors (this is all public info if you know where to look). This piqued my interest, so I started analyzing Amneal as the company likely to ramp up production of that drug.
Right away, I noticed strange after-hours price action - the stock would jump 10% during the day, then shed 8% after hours. Upon closer inspection, it became clear someone was buying up discounted shares after-hours as the price incrementally crept higher.
**Known Drugs that are popping:**
Colestipol: Colestipol is used with diet adjustments to reduce 'bad cholesterol' in people with high cholesterol. It belongs to a group of medications called bile acid sequestrants and works by binding bile acids in the intestines, which are then removed from the body.
Vyvanse: All of you regards should know that ADHD drugs are in high demand right now and that there’s a shortage (probably because it’s cheaper than coke), well Amneal received approval for the generic drug so that all of you can go back to your ADHD supply.
Now, onto the boring stuff…fundamentals:
**Business Overview:**
* Fully integrated pharma company focused on generics, specialty drugs, and government distribution. **4th largest generics maker in the U.S.**
* A diversified portfolio of \~270 complex products like injectables, inhalants, and topicals.
* Growing specialty segment targeting CNS and endocrine disorders.
* AvKARE acquisition expanded presence in government channels.
**Recent Catalysts:**
* Q2 beat on revenue ($599M, +7% YoY) and EPS ($0.19).
* Launched authorized generic of Xyrem - key new complex product.
* Got FDA approval for 5 complex generics, including 3 injectables. On track for 30+ launches in 2023.
* Continued biosimilars momentum with 3rd launch, FYLNETRA.
* Submitted ANDAs for 3 more high-value complex products.
* Raised full-year guidance on revenue, EBITDA, and EPS due to robust performance.
**Growth Drivers:**
* Deep pipeline of pending ANDA approvals for complex generics and biosimilars.
* More authorized generics partnerships like Xyrem.
* Expanding injectables and biosimilars into higher-value products.
* Continued government distribution penetration via AvKARE.
* International expansion is underway in China and Canada.
**Financials:**
* Solid revenue growth - new 2023 guidance of $2.3B-$2.4B (+11% YoY at midpoint).
* Expanding EBITDA margins, with 2023 EBITDA of $525M-$540M (+18% YoY at midpoint).
* EPS growth from operating leverage. 2023 EPS guidance raised to $0.45-$0.55 (+29% YoY at midpoint).
* Strong cash flow to fund growth and potential shareholder returns.
**Valuation**:
* Trades at just 7x 2023 EPS guidance midpoint of $0.50. Very reasonable given expected growth.
* EV/EBITDA of 5.5x on 2023 guidance midpoint of $532.5M is a discount to peers.
**Institutional Movements:**
* Several institutional investors adjusted their holdings in AMRX during Q1:
* Swiss National Bank increased its shares by 8.6%.
* Bank of New York Mellon Corp increased its stake by 1.1%.
* MetLife Investment Management LLC grew its position by a notable 169.4%.
* Panagora Asset Management Inc. raised its stake by 109.5%.
* BlackRock Inc., a major player, increased its position by 1.3%.
* Collectively, institutional investors and hedge funds own about 31.82% of the company.
**Stock Performance:**
* AMRX's shares started at $4.32 on a recent Wednesday, with a recent trend above their average: 50-day average is $3.75 and 200-day average is $2.68.
* Over the past year, the stock ranged from a low of $1.24 to a high of $4.74.
* The company's market cap stands at $1.32 billion, and its stock metrics include a PE ratio of -216.00 and a beta of 1.31.
* Financial ratios include a debt-to-equity of 17.18 and liquidity ratios of 1.12 (quick) and 1.83 (current).
**Good Vs. Bad:**
Positive Signs:
Insider Ownership: A significant portion of the company's stock (26.56%) is owned by company insiders. This is typically viewed as a vote of confidence from those who understand the company best.
Institutional Interest: Various reputable institutional investors have increased their stake in the company, which could indicate a positive sentiment among major players.
Performance Metrics: The company beat its earnings estimates and posted higher revenues than expected in its recent quarterly earnings, which is a bullish sign.
Strong Return on Equity: Despite a negative net margin, the company has a robust return on equity of 101.26%.
Concerns:
High Debt-to-Equity Ratio: A ratio of 17.18 suggests that the company is heavily leveraged and may have significant interest payments.
Negative PE Ratio: The negative PE ratio indicates the company is not profitable from an earnings perspective, which might be a concern for some investors.
Stock Volatility: A beta of 1.31 suggests that the stock is more volatile than the market. This might lead to more significant price swings.
**TLDR**: Amneal is an undervalued, high-growth pharma play with multiple near and long-term catalysts, due to it’s fundamentals and new drugs. The disconnect between strong fundamentals and low valuation multiples positions the stock for a breakout.
Positions: 2,500 shares of AMRX 546 Dec 15 '23 $5 Call