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Well, I don’t want to go about tooting my own horn but…..”Toot Toot”. $$$MR. MARKET$$$ did it again. Today I sold TARO at 112.87. That’s a 17% gain over my purchase price of 96.07 back on December 22, 2013. That’s a 17% gain in a little over 7 weeks. That’s an annualized gain of 120%. Over the same period, the S&P 500 was up 0.0%.
So $$$MR. MARKET$$$ made 17% and the rest of the market was zero. I am superior. If you divide me by the market, you get infinity. That’s how HUGE I am ….I am infinity.
That makes 31 consecutive profitable trades of 15% or better. 31. Do you know how many days are in a month? 31. Did you buy TARO? You? YOU?? YOU?? Did you make an annualized gain of 120%? You??
YOU?? YOU??? Do you have 31 consecutive profitable trades of 15% or better?
How much longer to do you have to watch me win and win and win and win? I am like the Harlem Globetrotters. All I do is win..! It doesn’t get boring making monies….I like making monies. I like beating the market.
What about you? Do you like $$$MR. MARKET$$$? DO you like these emails? DO you like my website. Everything I do is free…all you have to do is say something about my emails or my stock picks and I’ll continue to make picks.
If you say nothing, I will stop. I will keep the picks to myself.
So who wants another pick? Tell your friends about my website. Forward this email It’s easy. Did you get this email forwarded to you? Then how about sending me an email back?
Post on my forum, it’s even easier. www.mrmarketishuge.com
I am HUGE!!!!
$$$MR. MARKET$$$
================================================== ==============================
Default TARO ==> The Steubenville Winner
$$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investments.
I bet you didn’t know that Taro Pharmaceuticals makes all of these products:
A
AcetaZOLAMIDE Tablets USP, 125 mg
AcetaZOLAMIDE Tablets USP, 250 mg
Alclometasone Dipropionate Cream USP, 0.05%
Alclometasone Dipropionate Ointment USP, 0.05%
Amcinonide Cream USP, 0.1%
Amiodarone HCl Tablets, 100 mg
Amiodarone HCl Tablets, 200 mg
Amiodarone HCl Tablets, 400mg
Ammonium Lactate Cream, 12%
Ammonium Lactate Lotion, 12%
back to top
B
Betamethasone Dipropionate Cream (Augmented), 0.05%
Betamethasone Dipropionate Cream USP, 0.05%
Betamethasone Dipropionate Gel (Augmented), 0.05%
Betamethasone Valerate Cream USP, 0.1%
back to top
C
Carbamazepine Extended Release Capsules, 100 mg
Carbamazepine Extended-Release Tablets USP, 100 mg
Carbamazepine Extended-Release Tablets USP, 200 mg
Carbamazepine Extended-Release Tablets USP, 400 mg
Carbamazepine Oral Suspension USP, 100mg/5 mL
Carbamazepine Tablets USP (Chewable), 100 mg
Carbamazepine Tablets USP (Chewable), 200 mg
Carbamazepine Tablets USP, 200 mg
Ciclopirox Olamine Cream USP, 0.77%
Ciclopirox Shampoo 1%
Ciclopirox Topical Suspension USP, 0.77% (Lotion)
Clobetasol Propionate Cream (Emollient) USP, 0.05%
Clobetasol Propionate Cream USP, 0.05%
Clobetasol Propionate Gel, 0.05%
Clobetasol Propionate Ointment USP, 0.05%
Clobetasol Propionate Topical Solution USP, 0.05%
ClomiPRAMINE Hydrochloride Capsules, 25 mg
ClomiPRAMINE Hydrochloride Capsules, 50 mg
ClomiPRAMINE Hydrochloride Capsules, 75 mg
Clorazepate Dipotassium Tablets USP, 3.75 mg
Clorazepate Dipotassium Tablets USP, 7.5 mg
Clorazepate Dipotassium Tablets USP, 15 mg
Clotrimazole and Betamethasone Dipropionate Cream, USP
Clotrimazole and Betamethasone Dipropionate Lotion
Clotrimazole Cream USP, 1%
Clotrimazole Topical Solution USP, 1%
back to top
D
Desonide Cream, 0.05%
Desonide Ointment, 0.05%
Desoximetasone Cream USP, 0.05%
Desoximetasone Cream USP, 0.25%
Desoximetasone Gel USP, 0.05%
Desoximetasone Ointment USP, 0.05%
Desoximetasone Ointment USP, 0.25%
Diflorasone Diacetate Cream USP, 0.05%
Diflorasone Diacetate Ointment USP, 0.05%
back to top
E
Econazole Nitrate Cream 1%
Enalapril Maleate and Hydrochlorothiazide Tablets USP, 5/12.5mg
Enalapril Maleate and Hydrochlorothiazide Tablets USP, 10/25mg
Enalapril Maleate Tablets USP, 2.5 mg
Enalapril Maleate Tablets USP, 5 mg
Enalapril Maleate Tablets USP, 10 mg
Enalapril Maleate Tablets USP, 20 mg
Escitalopram Oxalate Oral Solution 5 mg / 5 mL
Etodolac Capsules USP, 200 mg
Etodolac Capsules USP, 300 mg
Etodolac Extended-Release Tablets 400 mg
Etodolac Extended-Release Tablets 500 mg
Etodolac Extended-Release Tablets 600 mg
Etodolac Tablets USP, 400 mg
Etodolac Tablets USP, 500 mg
back to top
F
Fluocinonide Cream USP, 0.05%
Fluocinonide Cream USP, 0.05% (Emulsified Base)
Fluocinonide Gel USP, 0.05%
Fluocinonide Ointment USP, 0.05%
Fluocinonide Topical Solution USP, 0.05%
Fluorouracil Topical Cream USP, 5%
Fluorouracil Topical Solution USP, 2%
Fluorouracil Topical Solution USP, 5%
Fluticasone Propionate Ointment 0.005%
back to top
H
Halobetasol Propionate Cream, 0.05%
Halobetasol Propionate Ointment 0.05%
Hydrocortisone Butyrate Cream USP, 0.1%
Hydrocortisone Butyrate Ointment 0.1%
Hydrocortisone Butyrate Topical Solution 0.1%
Hydrocortisone Cream USP, 2.5%
Hydrocortisone Valerate Cream USP, 0.2%
Hydrocortisone Valerate Ointment USP, 0.2%
back to top
K
Ketoconazole Cream, 2%
Ketoconazole Tablets USP, 200 mg
back to top
L
Lamotrigine Tablets (Chewable, Dispersible)
Lamotrigine Tablets, USP
Levetiracetam Oral Solution
Levetiracetam Tablets
Lidocaine Ointment USP, 5% (Spearmint flavored)
Lidocaine Ointment USP, 5%
Lustra (4% hydroquinone)
Lustra-AF (4% hydroquinone)
Lustra-Ultra (4% hydroquinone)
back to top
M
Malathion Lotion USP, 0.5%
Metronidazole Gel USP, 0.75%
Mometasone Furoate Ointment USP, 0.1%
Mometasone Furoate Topical Solution USP, 0.1% (Lotion)
Mupirocin Ointment USP, 2%
back to top
N
Nortriptyline Hydrochloride Capsules, USP
Nystatin and Triamcinolone Acetonide Cream, USP
Nystatin and Triamcinolone Acetonide Ointment, USP
Nystatin Cream USP, 100,000 units per gram
Nystatin Oral Suspension USP, 100,000 u/mL
back to top
O
Ovide® (malathion) Lotion, 0.5%
back to top
P
Phenytoin Oral Suspension USP, 125 mg/5 mL
Phenytoin Sodium (Extended Release) Capsules USP, 100 mg
back to top
T
Terconazole Vaginal Cream 0.4% (7-day therapy)
Terconazole Vaginal Cream 0.8% (3-Day Therapy)
Topicort ®(desoximetasone Gel USP), 0.05%
Topicort ®(desoximetasone ointment USP), 0.25%
Topicort® (desoximetasone cream USP) , 0.25%
Topicort® (desoximetasone cream USP), 0.05%
Topicort® (desoximetasone) Topical Spray, 0.25%
Topicort® (desoximetasone ointment USP), 0.05%
Triamcinolone Acetonide Cream USP, 0.1%
Triamcinolone Acetonide Dental Paste USP, 0.1%
back to top
U
U-cort®
back to top
W
Warfarin Sodium Tablets USP, 1mg
Warfarin Sodium Tablets USP, 2 mg
Warfarin Sodium Tablets USP, 2.5 mg
Warfarin Sodium Tablets USP, 3 mg
Warfarin Sodium Tablets USP, 4 mg
Warfarin Sodium Tablets USP, 5 mg
Warfarin Sodium Tablets USP, 6 mg
Warfarin Sodium Tablets USP, 7.5 mg
Warfarin Sodium Tablets USP, 10 mg
I bet you never even have heard about Taro Pharmaceuticals. Well I guess, now you have. On Friday December 20, 2013, I bought TARO at 96.07. I will sell it in 4 to 6 weeks at 110.86. Here is why I like TARO:
Of course I like the chart. The stock is up 98% this year and it’s PE is only 15. It’s growing and it’s cheap, with a PEG ratio of 1.06. It’s trading at a steep discount to the multiple of its closest peers and its multiple is also well below the market multiple (18x – 20x) awarded to recent acquisitions. The company is undervalued..period. Just going to a market multiple means the stock price will rise from 96 to 122.
Taro Pharmaceutical Industries Ltd., a science-based pharmaceutical company, together with its subsidiaries, engages in the research, development, production, and marketing of pharmaceutical products primarily in the United States, Canada, and Israel. It offers prescription and over-the-counter pharmaceutical products focusing on primary areas comprising topical creams and ointments, liquids, capsules, and tablets principally in the dermatological and topical, cardiovascular, neuropsychiatric, and anti-inflammatory therapeutic categories. The company also develops and manufactures active pharmaceutical ingredients for use in its finished dosage form products. Taro Pharmaceutical Industries Ltd. sells and distributes its products to drug wholesalers and store chains, generic drug distributors, mass merchandisers, food and retail chains, and managed care organizations. The company was founded in 1959 and is based in Haifa Bay, Israel.
In 2010 and 2011, when Taro received FDA nods to market generic versions of the antihistamine Zyrtec for children, the immune response modifier Aldara, the skin cancer drug Efudex, and more, hoping to cash in on hundreds of millions' worth of sales that fueled their original developers. The train just keeps on rolling. The Company recently received approvals from the U.S. Food and Drug Administration (“FDA”) for two Abbreviated New Drug Applications (“ANDAs”) for Levocetirizine Dihydrochloride Oral Solution, 2.5mg/5 mL (0.5mg/mL) and Gabapentin Capsules, 100 mg, 300 mg and 400 mg. TARO in April launched its proprietary Topicort 0.25% spray, an exciting new product in the $100m corticosteroid spray market. TARO currently has over 20 ANDA's awaiting FDA approval.
Its main area of expertise and specialization is in dermatological creams, ointments and gels. For creams and ointments to receive FDA approval, the manufacturers need to perform trials to show the FDA the generic formulation's effectiveness and safety. This creates a large barrier to entry as it is quite expensive to build a manufacturing facility and gain FDA approvals for new generic creams and ointments. In this low competition and high technical barrier to entry business, you see a lot of potential for price increases in TARO's bazillion products.
You’ve seen the products, now look at the earnings:
Quarter ended September 30, 2013 Highlights - compared to September 30, 2012
Net sales of $205.3 million, increased $44.3 million, or 27.5%, with slight increase in volumes
Operating income increased to $120.3 million, or 58.6% of net sales, compared to $82.4 million, or 51.2% of net sales;
Net income attributable to Taro was $96.3 million compared to $65.4 million, resulting in diluted earnings per share of $2.15 compared to $1.46
Six Months ended September 30, 2013 Highlights - compared to September 30, 2012
Net sales of $358.5 million, increased $38.4 million, or 12.0%, with volumes relatively flat
Net income attributable to Taro was $155.1 million compared to $128.3 million, a $26.8 million increase, resulting in diluted earnings per share of $3.46 compared to $2.87
Good news yes. Here’s the better news for shareholders. Can you say “activist investor”?
“There exists a significant ongoing opportunity to create shareholder value at Taro,” BlueMountain said in a statement Aug. 1. One of the two board members nominated by the hedge-fund firm is a former chief operating officer of Teva. Among all Israel-based companies, Taro has the third-largest market cap, which amounts to $4.3 billion and they have an activist investor. It’s important to follow BlueMountain, because empirical studies show that it’s possible to beat the market by piggybacking the best hedge funds. These guys are big bullies, but whether you like them or don’t like them, when they get their teeth into a stock, its price usually goes up.
Here’s where it really gets interesting. TARO is 66% owned by the controlling majority shareholder, Sun Pharma. In the past, the majority shareholder has unsuccessfully tried to buy out TARO's minority shareholders, at prices that many believed were extremely inadequate. Israel has strong protections built in for minority shareholders. While Sun has dropped plans to raise its stake in TARO from 66% to 100%, the move is being looked at positively. Since Sun isn’t going to buy TARO, they may actually look to sell it. Remember the 18x-20x market multiple? Sun can decide to sell TARO and immediately realize TARO's value. Sun could get $122 per share if it sold TARO to another pharmaceutical company at a 19x multiple.
Let’s compare TARO to another great generic pharma - PRGO. Both the companies are public and both compete in generic Rx and over-the-counter pharmaceuticals space. They both have significant presence in the dermatology/topical space and both have Israeli connections. Very similar, right?
TARO has higher Operating margin, higher 3-year Sales growth rate, higher 3-year EBIDTA growth rate and better ROE. TARO has a better balance sheet with significantly lower debt. PRGO trades at a PE of 32. That’s more than double the earnings multiple of TARO! If TARO was to trade based on Perrigo’s market multiple, its share price would be $190. Now you know why an activist investor wants a piece of TARO? These guys aren’t stupid.
Here’s why TARO’s stock is still cheap. Sun Pharma is preventing Taro from developing its business, and from signing strategic agreements with big pharma companies to distribute Taro’s products thus hindering its growth. They wanted to buy the rest of TARO cheap. Now that they’ve given up, the Corvette is out of the garage. VROOOOOOOM. Worse case, there may be an even higher offer from Sun Pharma
someday.
That’s the story in a nutshell. Great company, great story. Cheap stock price. But not for long. This baby is going to be my Christmas present to myself.
I am HUGE!
$$$MR. MARKET$$$
Last edited by mrmarket; 12-28-2013 at 04:35 PM.
=============================
So $$$MR. MARKET$$$ made 17% and the rest of the market was zero. I am superior. If you divide me by the market, you get infinity. That’s how HUGE I am ….I am infinity.
That makes 31 consecutive profitable trades of 15% or better. 31. Do you know how many days are in a month? 31. Did you buy TARO? You? YOU?? YOU?? Did you make an annualized gain of 120%? You??
YOU?? YOU??? Do you have 31 consecutive profitable trades of 15% or better?
How much longer to do you have to watch me win and win and win and win? I am like the Harlem Globetrotters. All I do is win..! It doesn’t get boring making monies….I like making monies. I like beating the market.
What about you? Do you like $$$MR. MARKET$$$? DO you like these emails? DO you like my website. Everything I do is free…all you have to do is say something about my emails or my stock picks and I’ll continue to make picks.
If you say nothing, I will stop. I will keep the picks to myself.
So who wants another pick? Tell your friends about my website. Forward this email It’s easy. Did you get this email forwarded to you? Then how about sending me an email back?
Post on my forum, it’s even easier. www.mrmarketishuge.com
I am HUGE!!!!
$$$MR. MARKET$$$
================================================== ==============================
Default TARO ==> The Steubenville Winner
$$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investments.
I bet you didn’t know that Taro Pharmaceuticals makes all of these products:
A
AcetaZOLAMIDE Tablets USP, 125 mg
AcetaZOLAMIDE Tablets USP, 250 mg
Alclometasone Dipropionate Cream USP, 0.05%
Alclometasone Dipropionate Ointment USP, 0.05%
Amcinonide Cream USP, 0.1%
Amiodarone HCl Tablets, 100 mg
Amiodarone HCl Tablets, 200 mg
Amiodarone HCl Tablets, 400mg
Ammonium Lactate Cream, 12%
Ammonium Lactate Lotion, 12%
back to top
B
Betamethasone Dipropionate Cream (Augmented), 0.05%
Betamethasone Dipropionate Cream USP, 0.05%
Betamethasone Dipropionate Gel (Augmented), 0.05%
Betamethasone Valerate Cream USP, 0.1%
back to top
C
Carbamazepine Extended Release Capsules, 100 mg
Carbamazepine Extended-Release Tablets USP, 100 mg
Carbamazepine Extended-Release Tablets USP, 200 mg
Carbamazepine Extended-Release Tablets USP, 400 mg
Carbamazepine Oral Suspension USP, 100mg/5 mL
Carbamazepine Tablets USP (Chewable), 100 mg
Carbamazepine Tablets USP (Chewable), 200 mg
Carbamazepine Tablets USP, 200 mg
Ciclopirox Olamine Cream USP, 0.77%
Ciclopirox Shampoo 1%
Ciclopirox Topical Suspension USP, 0.77% (Lotion)
Clobetasol Propionate Cream (Emollient) USP, 0.05%
Clobetasol Propionate Cream USP, 0.05%
Clobetasol Propionate Gel, 0.05%
Clobetasol Propionate Ointment USP, 0.05%
Clobetasol Propionate Topical Solution USP, 0.05%
ClomiPRAMINE Hydrochloride Capsules, 25 mg
ClomiPRAMINE Hydrochloride Capsules, 50 mg
ClomiPRAMINE Hydrochloride Capsules, 75 mg
Clorazepate Dipotassium Tablets USP, 3.75 mg
Clorazepate Dipotassium Tablets USP, 7.5 mg
Clorazepate Dipotassium Tablets USP, 15 mg
Clotrimazole and Betamethasone Dipropionate Cream, USP
Clotrimazole and Betamethasone Dipropionate Lotion
Clotrimazole Cream USP, 1%
Clotrimazole Topical Solution USP, 1%
back to top
D
Desonide Cream, 0.05%
Desonide Ointment, 0.05%
Desoximetasone Cream USP, 0.05%
Desoximetasone Cream USP, 0.25%
Desoximetasone Gel USP, 0.05%
Desoximetasone Ointment USP, 0.05%
Desoximetasone Ointment USP, 0.25%
Diflorasone Diacetate Cream USP, 0.05%
Diflorasone Diacetate Ointment USP, 0.05%
back to top
E
Econazole Nitrate Cream 1%
Enalapril Maleate and Hydrochlorothiazide Tablets USP, 5/12.5mg
Enalapril Maleate and Hydrochlorothiazide Tablets USP, 10/25mg
Enalapril Maleate Tablets USP, 2.5 mg
Enalapril Maleate Tablets USP, 5 mg
Enalapril Maleate Tablets USP, 10 mg
Enalapril Maleate Tablets USP, 20 mg
Escitalopram Oxalate Oral Solution 5 mg / 5 mL
Etodolac Capsules USP, 200 mg
Etodolac Capsules USP, 300 mg
Etodolac Extended-Release Tablets 400 mg
Etodolac Extended-Release Tablets 500 mg
Etodolac Extended-Release Tablets 600 mg
Etodolac Tablets USP, 400 mg
Etodolac Tablets USP, 500 mg
back to top
F
Fluocinonide Cream USP, 0.05%
Fluocinonide Cream USP, 0.05% (Emulsified Base)
Fluocinonide Gel USP, 0.05%
Fluocinonide Ointment USP, 0.05%
Fluocinonide Topical Solution USP, 0.05%
Fluorouracil Topical Cream USP, 5%
Fluorouracil Topical Solution USP, 2%
Fluorouracil Topical Solution USP, 5%
Fluticasone Propionate Ointment 0.005%
back to top
H
Halobetasol Propionate Cream, 0.05%
Halobetasol Propionate Ointment 0.05%
Hydrocortisone Butyrate Cream USP, 0.1%
Hydrocortisone Butyrate Ointment 0.1%
Hydrocortisone Butyrate Topical Solution 0.1%
Hydrocortisone Cream USP, 2.5%
Hydrocortisone Valerate Cream USP, 0.2%
Hydrocortisone Valerate Ointment USP, 0.2%
back to top
K
Ketoconazole Cream, 2%
Ketoconazole Tablets USP, 200 mg
back to top
L
Lamotrigine Tablets (Chewable, Dispersible)
Lamotrigine Tablets, USP
Levetiracetam Oral Solution
Levetiracetam Tablets
Lidocaine Ointment USP, 5% (Spearmint flavored)
Lidocaine Ointment USP, 5%
Lustra (4% hydroquinone)
Lustra-AF (4% hydroquinone)
Lustra-Ultra (4% hydroquinone)
back to top
M
Malathion Lotion USP, 0.5%
Metronidazole Gel USP, 0.75%
Mometasone Furoate Ointment USP, 0.1%
Mometasone Furoate Topical Solution USP, 0.1% (Lotion)
Mupirocin Ointment USP, 2%
back to top
N
Nortriptyline Hydrochloride Capsules, USP
Nystatin and Triamcinolone Acetonide Cream, USP
Nystatin and Triamcinolone Acetonide Ointment, USP
Nystatin Cream USP, 100,000 units per gram
Nystatin Oral Suspension USP, 100,000 u/mL
back to top
O
Ovide® (malathion) Lotion, 0.5%
back to top
P
Phenytoin Oral Suspension USP, 125 mg/5 mL
Phenytoin Sodium (Extended Release) Capsules USP, 100 mg
back to top
T
Terconazole Vaginal Cream 0.4% (7-day therapy)
Terconazole Vaginal Cream 0.8% (3-Day Therapy)
Topicort ®(desoximetasone Gel USP), 0.05%
Topicort ®(desoximetasone ointment USP), 0.25%
Topicort® (desoximetasone cream USP) , 0.25%
Topicort® (desoximetasone cream USP), 0.05%
Topicort® (desoximetasone) Topical Spray, 0.25%
Topicort® (desoximetasone ointment USP), 0.05%
Triamcinolone Acetonide Cream USP, 0.1%
Triamcinolone Acetonide Dental Paste USP, 0.1%
back to top
U
U-cort®
back to top
W
Warfarin Sodium Tablets USP, 1mg
Warfarin Sodium Tablets USP, 2 mg
Warfarin Sodium Tablets USP, 2.5 mg
Warfarin Sodium Tablets USP, 3 mg
Warfarin Sodium Tablets USP, 4 mg
Warfarin Sodium Tablets USP, 5 mg
Warfarin Sodium Tablets USP, 6 mg
Warfarin Sodium Tablets USP, 7.5 mg
Warfarin Sodium Tablets USP, 10 mg
I bet you never even have heard about Taro Pharmaceuticals. Well I guess, now you have. On Friday December 20, 2013, I bought TARO at 96.07. I will sell it in 4 to 6 weeks at 110.86. Here is why I like TARO:
Of course I like the chart. The stock is up 98% this year and it’s PE is only 15. It’s growing and it’s cheap, with a PEG ratio of 1.06. It’s trading at a steep discount to the multiple of its closest peers and its multiple is also well below the market multiple (18x – 20x) awarded to recent acquisitions. The company is undervalued..period. Just going to a market multiple means the stock price will rise from 96 to 122.
Taro Pharmaceutical Industries Ltd., a science-based pharmaceutical company, together with its subsidiaries, engages in the research, development, production, and marketing of pharmaceutical products primarily in the United States, Canada, and Israel. It offers prescription and over-the-counter pharmaceutical products focusing on primary areas comprising topical creams and ointments, liquids, capsules, and tablets principally in the dermatological and topical, cardiovascular, neuropsychiatric, and anti-inflammatory therapeutic categories. The company also develops and manufactures active pharmaceutical ingredients for use in its finished dosage form products. Taro Pharmaceutical Industries Ltd. sells and distributes its products to drug wholesalers and store chains, generic drug distributors, mass merchandisers, food and retail chains, and managed care organizations. The company was founded in 1959 and is based in Haifa Bay, Israel.
In 2010 and 2011, when Taro received FDA nods to market generic versions of the antihistamine Zyrtec for children, the immune response modifier Aldara, the skin cancer drug Efudex, and more, hoping to cash in on hundreds of millions' worth of sales that fueled their original developers. The train just keeps on rolling. The Company recently received approvals from the U.S. Food and Drug Administration (“FDA”) for two Abbreviated New Drug Applications (“ANDAs”) for Levocetirizine Dihydrochloride Oral Solution, 2.5mg/5 mL (0.5mg/mL) and Gabapentin Capsules, 100 mg, 300 mg and 400 mg. TARO in April launched its proprietary Topicort 0.25% spray, an exciting new product in the $100m corticosteroid spray market. TARO currently has over 20 ANDA's awaiting FDA approval.
Its main area of expertise and specialization is in dermatological creams, ointments and gels. For creams and ointments to receive FDA approval, the manufacturers need to perform trials to show the FDA the generic formulation's effectiveness and safety. This creates a large barrier to entry as it is quite expensive to build a manufacturing facility and gain FDA approvals for new generic creams and ointments. In this low competition and high technical barrier to entry business, you see a lot of potential for price increases in TARO's bazillion products.
You’ve seen the products, now look at the earnings:
Quarter ended September 30, 2013 Highlights - compared to September 30, 2012
Net sales of $205.3 million, increased $44.3 million, or 27.5%, with slight increase in volumes
Operating income increased to $120.3 million, or 58.6% of net sales, compared to $82.4 million, or 51.2% of net sales;
Net income attributable to Taro was $96.3 million compared to $65.4 million, resulting in diluted earnings per share of $2.15 compared to $1.46
Six Months ended September 30, 2013 Highlights - compared to September 30, 2012
Net sales of $358.5 million, increased $38.4 million, or 12.0%, with volumes relatively flat
Net income attributable to Taro was $155.1 million compared to $128.3 million, a $26.8 million increase, resulting in diluted earnings per share of $3.46 compared to $2.87
Good news yes. Here’s the better news for shareholders. Can you say “activist investor”?
“There exists a significant ongoing opportunity to create shareholder value at Taro,” BlueMountain said in a statement Aug. 1. One of the two board members nominated by the hedge-fund firm is a former chief operating officer of Teva. Among all Israel-based companies, Taro has the third-largest market cap, which amounts to $4.3 billion and they have an activist investor. It’s important to follow BlueMountain, because empirical studies show that it’s possible to beat the market by piggybacking the best hedge funds. These guys are big bullies, but whether you like them or don’t like them, when they get their teeth into a stock, its price usually goes up.
Here’s where it really gets interesting. TARO is 66% owned by the controlling majority shareholder, Sun Pharma. In the past, the majority shareholder has unsuccessfully tried to buy out TARO's minority shareholders, at prices that many believed were extremely inadequate. Israel has strong protections built in for minority shareholders. While Sun has dropped plans to raise its stake in TARO from 66% to 100%, the move is being looked at positively. Since Sun isn’t going to buy TARO, they may actually look to sell it. Remember the 18x-20x market multiple? Sun can decide to sell TARO and immediately realize TARO's value. Sun could get $122 per share if it sold TARO to another pharmaceutical company at a 19x multiple.
Let’s compare TARO to another great generic pharma - PRGO. Both the companies are public and both compete in generic Rx and over-the-counter pharmaceuticals space. They both have significant presence in the dermatology/topical space and both have Israeli connections. Very similar, right?
TARO has higher Operating margin, higher 3-year Sales growth rate, higher 3-year EBIDTA growth rate and better ROE. TARO has a better balance sheet with significantly lower debt. PRGO trades at a PE of 32. That’s more than double the earnings multiple of TARO! If TARO was to trade based on Perrigo’s market multiple, its share price would be $190. Now you know why an activist investor wants a piece of TARO? These guys aren’t stupid.
Here’s why TARO’s stock is still cheap. Sun Pharma is preventing Taro from developing its business, and from signing strategic agreements with big pharma companies to distribute Taro’s products thus hindering its growth. They wanted to buy the rest of TARO cheap. Now that they’ve given up, the Corvette is out of the garage. VROOOOOOOM. Worse case, there may be an even higher offer from Sun Pharma
someday.
That’s the story in a nutshell. Great company, great story. Cheap stock price. But not for long. This baby is going to be my Christmas present to myself.
I am HUGE!
$$$MR. MARKET$$$
Last edited by mrmarket; 12-28-2013 at 04:35 PM.
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