Company making acquisitions
Liberty Media Corp (NASDAQ:LMCA) acquired more than 50% stake in Sirius XM Radio in January 2013. Sirius reported net income of $124 million, which was an increase of 15% quarter over quarter. Its revenue is heavily dependent on the automobile market, as the automobile makers have satellite radio units installed in their cars. The customer base for the company grew by 450,000 to 24.4 million customers in the first quarter of 2013, and it is expecting it to grow by an additional 1.4 million in 2013.
Sirius is expecting a tailwind in the automobile sector with a recovery of 8% Seasonal Adjusted Annual Rate to $15.3 million in the first quarter of 2013. Liberty is also planning to invest more in this segment in 2013 by developing a next generation connected car platform. The company is optimistic with the growth of the automobile sector, which will result in better revenue.
Liberty Media Corp (NASDAQ:LMCA) announced another acquisition of Charter Communications, Inc. (NASDAQ:CHTR) in March 2013, in which the company will have 27.3% stake. The stake will increase to 35% after January 2016 and will increase further to 40% thereafter. The company will pay $2.67 billion for the stake, which will include 26.9 million shares and 1.1 million warrants.
Charter Communications, Inc. (NASDAQ:CHTR) is fourth largest in the cable market in the U.S. with 4 million video subscribers and it reported a rise of 56,000 residential customers in the first quarter of 2013. Liberty was attracted towards Charter Communications, Inc. (NASDAQ:CHTR) because of its unique business plans to improve broadband service, and the growth in broadband internet remains strong as consumers demand high speed. Liberty Media Corp (NASDAQ:LMCA) is already serving some European and Latin American countries with its cable TV and broadband services, and in this deal, the company will get the direct opportunity to enter the U.S. market to serve the large customer base of Charter.
Looking at Liberty Media Corp (NASDAQ:LMCA)’s performance, the company has made good deals to secure profits in upcoming years and will observe a positive impact on revenue.
Business segment performing well
Watson Pharmaceuticals acquired Actavis Inc (NYSE:ACT) for $4.25 billion in October 2012 and took the name Actavis. After the acquisition, it became the third largest pharmaceutical company in the generic drug market in the U.S. Actavis Inc (NYSE:ACT) widened Watson’s international presence with majority sales driven by markets in the U.K., Greece, Australia, and Canada. The acquisition was successful in bringing low-cost manufacturing plants in the international market to Actavis Inc (NYSE:ACT). The company is expecting synergies of $300 million in 2014 and 2015 through research and development, growing international ventures, and low-cost manufacturing plants.
Actavis’ ‘Specialty Brand’ segment grew 9.4% year over year and generated revenue of $412 million in the first quarter of 2013. The company is expecting this segment to reach $550 million-$600 million in the second half of 2013. Actavis Inc (NYSE:ACT) is confident on the estimate due to sales of its top performing drug named ”Rapaflo”. Rapaflo is the best-selling drug for the company which is used for the treatment of enlarged prostates. Rapaflo holds 10% market share in the U.S. and the company is expecting the sales number for the drug to cross its current $100 million mark as the total prescription growth for the drug market is 32% year over year.
Product sales on the rise
AbbVie Inc (NYSE:ABBV)’s first quarter revenue was $4.33 billion, which is an increase of 4% year over year. The international sales of the company rose 8% to $2.21 billion, which was largely driven by their product Humira. Humira saw an increase in sales of 16% to $2.24 billion globally year over year. It is the most important drug for AbbVie Inc (NYSE:ABBV) in terms of revenue as it accounted for half of the company’s revenue in 2012. It expects revenue of $18 billion in the year 2013, which includes the highest contribution from Humira. The patent for the drug will expire in 2016, so the company has a long-term opportunity to gain from its best-selling drug.
The company’s revenue is also driven by one more important drug in its portfolio, which is Androgel, a drug used on men to treat low testosterone levels. AbbVie Inc (NYSE:ABBV) recently announced the sales number for the product in the first quarter of 2013, which was $240 million, a 3.4% increase year over year. The biggest rival for the product is Auxilium Pharmaceuticals’ Testim, which customers are moving to, as it is cheaper than Androgel. But, AbbVie Inc (NYSE:ABBV) is strengthening its marketing efforts to be the market leader.
The U.S. testosterone enhancement drug market was valued at $2.1 billion in 2012 and the prescriptions increased from 1 million to 7 million from the year 2000 to 2012. So, the company is expecting the drug to perform in 2013 and contribute to the estimated revenue of $18 billion discussed earlier.
Conclusion
Liberty Media Corp (NASDAQ:LMCA)’s recent acquisition of Sirius XM and Charter Communications shows the company’s strategy to grow at a good pace and gain the majority of the market share.
Excellent performance of the segment and an acquisition will add to Actavis Inc (NYSE:ACT)’ value in the market, which will result in profitable numbers.
AbbVie Inc (NYSE:ABBV)’s drugs are performing exceptionally well in the U.S. market as well as globally, which proves the company’s strong base to survive in the competitive scenario.
Therefore, I recommend a buy on all these stocks.
The article Investing Opportunity in 3 Profit Making Companies originally appeared on Fool.com and is written by Madhu Dube.
Madhu Dube has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Madhu is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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