Diamonds and Dogs

6/21/16

Staying United is showing that today's diamond can soar higher. United Continental Holdings (UAL), the merged company of United Airlines and Continental Airlines jumped 3% after disclosing plans to boost revenue and reduce costs to improve earnings. The company will focus on the efficiency of its current operations by lessening delays and improving schedule quality. UAL also updated their second-quarter expectations for their quarterly passenger unit revenue to come in better than expected. Maybe they should've hedged oil when it was in the mid-20s this winter. That would've boosted earnings.

The dog is in the lab today. Impax Laboratories (IPX) dropped 11% not far from its 52 week low after agreeing to acquire 15 generic drugs from Teva Pharmaceutical and affiliates of Allergan. The deal will cost Impax approximately $586 million of which $400 million will be paid with loans. Together, the new drugs will generated $150 million in sales and $100 million in gross profits. Impax said the acquisitions will add $80 million to its top line in the second half of this year, and would double full-year earnings growth to 20%. Impax also hiked its full-year interest-expense guidance to 20% from 12%, and slightly increased its gross-profit guidance to the low 50% range. Impax CEO Fred Wilkinson said on a conference call with analysts that the timing is highly opportune, since Impax was facing a difficult second half financially. Shareholders seem to agree on the latter statement.