Alexion Jumps as Lower-Than-Projected Tax Rate Boosts Profit

Jan 30, 2014 4:39 pm ET

(Updates with closing share price in second paragraph.)

Jan. 30 (Bloomberg) -- Alexion Pharmaceuticals Inc., maker of the rare-disease drug Soliris, soared to a record value after fourth-quarter earnings and its 2014 forecast exceeded analysts’ estimates, helped by a lower-than-projected tax rate.

Alexion gained 21 percent to $162 at the close in New York, its highest closing price since the company first sold stock to the public in 1996. The single-day share increase was the biggest for the Cheshire, Connecticut-based company in more than 11 years and the stock is up 70 percent in the past year.

Alexion reported earnings, excluding one-time items, of 87 cents a share, topping by 3 cents the average of 18 analysts’ estimates compiled by Bloomberg. The drugmaker’s 2014 profit forecast of $3.70 to $3.80 a share was higher than the average estimate of $3.46. The company also projected an adjusted tax rate of 10 percent to 11 percent, compared with the 26 percent estimate of Cowen & Co. analyst Eric Schmidt.

“The biggest news today, though, is an Irish tax restructuring the company has just completed,” Schmidt wrote in a research note today. “2014 guidance was ahead of consensus on the top line, but far ahead of consensus on the bottom line due to the tax restructuring. This will drive lower future taxes and cost of goods sold, and higher profitability, than the Street had anticipated.”

Alexion has moved some of its operations to Ireland, allowing it to benefit from that country’s lower tax rate, according to a Bloomberg Industries report.

Alexion forecast 2014 revenue of $2 billion to $2.02 billion, higher than the average estimate of $1.97 billion.

Fourth-quarter sales surged 38 percent to $441.9 million, beating the average $431.5 million estimate, as use of Soliris rose in Western Europe, Japan and the U.S.

The drugmaker reported a net loss of $19 million, or 10 cents a share, compared with profit of $81 million, or 40 cents, a year earlier.

--Editors: Bruce Rule, Andrew Pollack