Is Forest Laboratories a Buy Now?

With shares of Forest Laboratories (NYSE:FRX) trading at around $37.59, is FRX an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Forest Laboratories failed to meet expectations. This would often mean a good reason to sell. However, in some cases, it presents a buying opportunity. Is this one of those cases? Let’s take a look.

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Forest Laboratories is trading all over the map today. It’s obvious that investors aren’t sure what to make of the situation. On one hand, short-term results were bad, which leads to weakness in the stock price. On the other hand, there is little doubt that Forest Laboratories is a long-term success story. Therefore, a lot should depend on your trading or investing goals.

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As for the results reported earlier this morning, revenue dropped to $722.70 million from $1.21 billion. The primary reason for this was the loss of patent exclusivity on Lexapro. In regards to earnings, the GAAP loss per share was $0.58, and the non-GAAP loss per share was $0.21.

Overall, there was a big drop in sales, but some drugs still performed well. What is most important is the company’s utmost confidence in recently launched drugs, Tudorza and Linzess.

Let’s take a look at the bigger picture for Forest Laboratories.