Shares of Taro Pharmaceutical Industries plummeted more than 25% on Thursday after it said that third-quarter net earnings almost halved and came in way below expectations.
Taro, which was founded in Haifa, said that in the three months ending on September 30, net profit dropped to $2.1m. from $4m., earnings per diluted share fell to seven cents from 14 cents, and sales slipped to $72.5m. from $73.3m. Revenue in the 2004 period included contributions from over-the-counter product lines that Taaro divested earlier this year.
Analyst expectations for EPS ranged from 25-31 cents and for revenue they ranged from $79.43m.-$82.8m., as compiled by Thomson Financial Network. Investors seem to have been horrified by the results and in morning trading on Nasdaq, shares plunged 26% to $16.17.
Taro said earnings were hurt by price erosion and an increase in production costs, due to the strengthening of the Canadian dollar against the US dollar.
Chairman Barrie Levitt said: "Our results reflect the competitive nature of the generic drug industry and our continuing investment in the development of proprietary and generic drugs."
Nine-month net profit doubled to $12.6m. from $6.3m., diluted EPS rose to 42 cents from 21 cents, and sales rose to $225.3m. from $206.5m.