Endo Health Solutions Inc (ENDP) Stock Review – Buy or Sell?
Endo Health Solutions Inc is a specialty pharmaceutical company that researches, develops, sells and markets branded and generic prescription pharmaceuticals used to treat and manage pain.
In the last 12 months, the company's stock price has risen by over 110%.
Part of the rise in stock price has been Endo's "growth by acquisition" success. The recent $1.6B deal to buy Paladin Labs will provide Endo an extremely favorable long-term tax rate of 20%.
This acquisition, along with a previous (Aug 2013) deal will see the company diversify its products, helping to reduce the patent risk associated with the firm's portfolio.
While ENDP shares have been on a tear since 2013, investors should watch carefully for red flags that might appear in the coming years.
The company is mired in significant litigation (over 16,000 cases) over its vaginal mesh product line.
Even if a small percentage of those cases are decided in favor of the plaintiffs, it could spell serious trouble for the company.
Additionally, with so many quick acquisitions also comes integration risk, which investors must carefully watch for in 2014 and 2015.