Assertio Therapeutics, Inc. (ASRT), a commercial pharmaceutical company headquartered in Newark, Calif., provides neurology, hospital, and pain and inflammation medicines. ASRT stock has fallen 29.7% in price over the past year and 40.8% year-to-date to close yesterday’s trading session at $1.55. The shares have also declined 40.8% over the past six months, possibly due to conspiracy claims against the company.

There were allegations that Bausch Health Cos Inc. (BHC), ASRT, and Lupin Pharmaceuticals conspired to  purchase Bausch's type 2 diabetes drug, Glumetza, to suppress  generic competition through an illegal patent settlement. The company settled the Glumetza antitrust litigation for $7.0 million, which was paid in the third quarter, and includes a $3.85 million class settlement subject to court approval.

The stock gained 37.2% in price after the company reported its third-quarter earnings, beating the consensus estimate. ASRT’s net income came in at $3.74 million, reflecting a 135.5% increase year-over-year, while its EPS increased 122.9% year-over-year to $0.08 versus the negative $0.04 consensus estimate. But the company’s total revenues declined 26.3% from its prior-year quarter to $25.47 million.

The bleak analyst expectations could lead to loss of investor interest and may cause its shares to retreat in the near term.

Click here to checkout our Healthcare Sector Report for 2021

Here is what could influence ASRT’s performance in the upcoming months:

Bleak Consensus Estimates

Analysts expect ASRT’s revenues to decline 32.3% in the current quarter and 10.9% in the current year. Also, its revenue is expected to decline 11.2% year-over-year to $84.04 million in the following year. The company’s EPS is expected to decrease 116.7% in the current  quarter and 125% in the next quarter. The Street expects ASRT’s EPS to fall 312.5% year-over-year to a negative $0.33 in the current year, and the company's EPS is expected to remain negative at least until next year.

Disappointing Historical Performance

ASRT’s revenues and EBITDA have declined at CAGRs of 32.9% and 48.3%, respectively, over the past three years. Also, its levered FCF declined at a 42.7% CAGR over the past three years. ASRT’s trailing-12-months net operating cash flow came in at negative $4.59 million.

POWR Ratings Reflect Poor Growth Prospects

ASRT has an overall D rating, which translates to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a grade of D for Stability, consistent with its1.59  beta.

ASRT also has a D grade for Sentiment. Unfavorable analyst sentiment about the stock justifies this grade.

Of the 214 stocks in the Medical – Pharmaceuticals industry, ASRT is ranked #124.

Beyond what I have stated above, one  can also view ASRT’s grades for Quality, Growth, Momentum, and Value here.

View the top-rated stocks in the Medical – Pharmaceuticals industry here.

Bottom-Line

Better-than-expected third-quarter earnings have helped ASRT’s shares soar in price over the past few days. However, the stock is volatile, as evidenced by its high beta. Furthermore, considering Street’s expectation of a decline in the company’s earnings in the current quarter, we think the stock is best avoided now.

How Does Assertio Holdings, Inc. (ASRT) Stack Up Against its Peers?

While ASRT has an overall POWR Rating of D, one might want to consider investing in the following Medical – Pharmaceuticals stocks with an A (Strong Buy) rating: Johnson & Johnson (JNJ), Novartis AG (NVS), and GlaxoSmithKline PLC (GSK).

Click here to checkout our Healthcare Sector Report for 2021

ASRT shares fell $1.55 (-100.00%) in premarket trading Wednesday. Year-to-date, ASRT has gained 8.36%, versus a 26.23% rise in the benchmark S&P 500 index during the same period.

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.

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