Biopharma company Jazz Pharmaceuticals (NASDAQ:JAZZ) beat Wall Street’s revenue expectations in Q4 CY2024, with sales up 7.5% year on year to $1.09 billion. On the other hand, the company’s full-year revenue guidance of $4.28 billion at the midpoint came in 1.5% below analysts’ estimates. Its non-GAAP profit of $6.60 per share was 13.6% above analysts’ consensus estimates.
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Jazz Pharmaceuticals (JAZZ) Q4 CY2024 Highlights:
Company Overview
Founded in 2003, Jazz Pharmaceuticals (NASDAQ:JAZZ) develops and commercializes therapies to address unmet medical needs in neuroscience, oncology, and rare diseases.
Specialty Pharmaceuticals
The specialty pharmaceutical industry relies on a high-cost, high-reward business model, driven by substantial investments in research and development to create innovative, patent-protected drugs for niche diseases. Successful products can generate significant revenue streams over their patent life, and the larger a roster of niche drugs, the stronger a moat a company enjoys. However, the business model is inherently risky, with high failure rates during clinical trials, lengthy regulatory approval processes, and competition from generic and biosimilar manufacturers once patents expire. These challenges, combined with scrutiny over drug pricing, create a complex operating environment. Looking ahead, the industry is positioned for tailwinds from advancements in precision medicine, increasing adoption of AI to enhance drug development efficiency, and growing global demand for treatments addressing chronic and rare diseases. However, headwinds include heightened regulatory scrutiny, pricing pressures from governments and insurers, and the looming patent cliffs for key blockbuster drugs. Patent cliffs bring about competition from generics, forcing branded pharmaceutical companies back to the drawing board to find the next big thing.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Jazz Pharmaceuticals’s 13.5% annualized revenue growth over the last five years was solid. Its growth beat the average healthcare company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Jazz Pharmaceuticals’s recent history shows its demand slowed as its annualized revenue growth of 5.4% over the last two years is below its five-year trend.
This quarter, Jazz Pharmaceuticals reported year-on-year revenue growth of 7.5%, and its $1.09 billion of revenue exceeded Wall Street’s estimates by 2.8%.
Looking ahead, sell-side analysts expect revenue to grow 5.6% over the next 12 months, similar to its two-year rate. This projection is above average for the sector and suggests its newer products and services will help maintain its recent top-line performance.
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Operating Margin
Jazz Pharmaceuticals has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 10.4%, higher than the broader healthcare sector.
Analyzing the trend in its profitability, Jazz Pharmaceuticals’s operating margin rose by 1.6 percentage points over the last five years, as its sales growth gave it operating leverage. This performance was mostly driven by its recent improvements as the company’s margin has increased by 19.4 percentage points on a two-year basis.
This quarter, Jazz Pharmaceuticals generated an operating profit margin of 17.5%, up 5.4 percentage points year on year. This increase was a welcome development and shows it was recently more efficient because its expenses grew slower than its revenue.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Jazz Pharmaceuticals’s EPS grew at a decent 6.6% compounded annual growth rate over the last five years. Despite its operating margin expansion during that time, this performance was lower than its 13.5% annualized revenue growth, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.
Diving into the nuances of Jazz Pharmaceuticals’s earnings can give us a better understanding of its performance. A five-year view shows Jazz Pharmaceuticals has diluted its shareholders, growing its share count by 7.4%. This dilution overshadowed its increased operating efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
In Q4, Jazz Pharmaceuticals reported EPS at $6.60, up from $4.96 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Jazz Pharmaceuticals’s full-year EPS of $21.19 to grow 3.9%.
Key Takeaways from Jazz Pharmaceuticals’s Q4 Results
We were impressed by how significantly Jazz Pharmaceuticals blew past analysts’ full-year EPS guidance expectations this quarter. We were also glad its revenue and EPS outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance slightly missed. Overall, we think this was a decent quarter with some key metrics above expectations. The market seemed to focus on the negatives, and the stock traded down 2.6% to $136.01 immediately after reporting.
So should you invest in Jazz Pharmaceuticals right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free .