Yesterday, Amneal Pharmaceuticals (AMRX) issued guidance for the first quarter of 2023 that came in over the consensus estimates. This sent shares trading as much as 14% higher in premarket trading. The stock opened Monday’s trading session at $1.34/share and closed at $1.63 for a nice single-day gain.

The pharmaceutical company says that revenue is going to soar as high as $560 million – a 12% increase year over year. And, this is a ways above the FactSet consensus of $529 million. While Amneal isn’t expecting to turn a profit in the quarter, the pre-tax loss of $10 million to break even is a 50% improvement from this time last year.

Many of the other figures are expected to remain stagnant and fall in line with analyst expectations. This includes the EPS guidance of 40-50 cents per share (in line with FactSet’s estimate of 50 cents per share), and full-year revenue of $2.25-2.35 billion (compared to FactSet’s estimate of $2.32 billion).

The stock has been sliding lower and lower for the past 5 years since topping out at around $24 per share way back in 2018. Since then, shares have tanked more than 90%. In the last year alone, they’re down 60%. Needless to say, yesterday’s quick pump was a welcome sight for investors in AMRX who have weathered this storm.

But, is this just a temporary turnaround? Or, is this a sign of what’s to come on the horizon? We’ve analyzed AMRX through the VectorVest stock analyzing software and see 3 major issues that investors need to be aware of.

Despite the Upbeat Guidance and Monday’s Trading Session, AMRX Still Has Poor Upside Potential, Safety, & Timing

The VectorVest system is a game changer for investors, allowing them to win more trades with less work. You can simplify your trading strategy by relying on the proprietary stock rating system that tells you what to buy, when to buy it, and when to sell it.

The entire system is powered by 3 intuitive ratings: relative value (RV), relative safety (RS), and relative timing (RT). Each of these sits on its own scale of 0.00-2.00, with 1.00 being the average.

And, based on these ratings, VectorVest is able to provide you with a clear buy, sell, or hold recommendation for any given stock, at any given time. As for AMRX, here’s what you need to know:

  • Poor Upside Potential: The RV rating is a far better indicator of a stock’s long-term price appreciation potential than a simple comparison of price and value. That’s because it’s computed based on a 3-year price projection alongside AAA corporate bond rates and risk. As of now, the RV rating of 0.84 is poor for AMRX. But, the stock is fairly valued right now.
  • Poor Safety: In looking at the risk associated with AMRX, VectorVest issued a poor RS rating of 0.67. This is calculated through an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity.
  • Poor Timing: Despite yesterday’s turnaround for AMRX, the stock still has poor timing - with an RT rating of just 0.60. This is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year.

Considering all this, the overall VST rating is a mere 0.70 - which is poor. So, does that mean it’s officially time to cut losses with AMRX? Or, is there still a reason to hold onto hope after the company raised guidance?

You can get a clear answer on your next move through a free stock analysis at VectorVest - you’re not going to want to miss this one…

Amneal Pharma (AMRX) stock analysis chart by VectorVest Mobile

Want These Types of Insights at Your Fingertips so You Can Win More Trades?

Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.

VectorVest advocates buying safe, undervalued stocks, rising in price. Despite the upbeat guidance the company issued yesterday - along with the positive trading session that followed - AMRX still has poor upside potential, safety, and timing.

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