zacks shire plc

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Shire plc (SHPG-NASDAQ)

SUMMARY

SUMMARY DATA

Risk Level * Below Avg.,

Type of Stock Large-Growth Industry Med-Drugs Zacks Industry Rank * 78 out of 267

Current Recommendation OUTPERFORM

Prior Recommendation Neutral

Date of Last Change 11/24/2013

Current Price (02/19/14) $165.78

Target Price $199.00

Shire reported fourth quarter 2013 earnings of $2.26 per ADS, up from $1.66 per ADS in the year-ago quarter, and beat the Zacks Consensus Estimate of $2.03. Quarterly revenues increased 12% to $1.3 billion, in line with the Zacks Consensus Estimate. The increase in revenues was driven by a robust growth in product sales. Shire is well placed in the ADHD market thanks to key drug Vyvanse.We are positive on Shire s acquisition of ViroPharma which will strengthen its HAE franchise as Cinryze and Firazyr are two complementary therapies for the treatment of HAE. Meanwhile, Shire s efforts to realign its business structure to drive growth and innovation are noteworthy. The realignment is expected to drive improved operating leverage in 2014 and 2015. We maintain our Outperform recommendation on the stock.

52-Week High $165.78 52-Week Low $86.59 One-Year Return (%) 75.34 Beta 0.82 Average Daily Volume (ADS) 440,088

ADS Outstanding (mil) 188 Market Capitalization ($mil) $31,166 Short Interest Ratio (days) 3.10 Institutional Ownership (%) N/A Insider Ownership (%) N/A

Annual Cash Dividend $0.53 Dividend Yield (%) 0.32

5-Yr. Historical Growth Rates

Sales (%) 13.6 Earnings Per Share (%) 16.8 Dividend (%) 14.7

P/E using TTM EPADS 21.6

P/E using 2014 Estimate 17.5

P/E using 2015 Estimate 15.9

Zacks Rank *: Short Term 1 3 months outlook 1 - Strong Buy * Definition / Disclosure on last page

ZACKS CONSENSUS ESTIMATES

Revenue Estimates (In millions of $)

Q1 Q2 Q3 Q4 Year

(Mar) (Jun) (Sep) (Dec) (Dec)

2012 1,172 A 1,208 A 1,100 A 1,201 A 4,681 A

2013 1,162 A 1,275 A 1,237 A 1,326 A 4,934 A

2014 1,371 E 1,439 E 1,451 E 1,508 E 5,769 E

2015 5,977 E

Earnings per ADS Estimates (EPADS is operating earnings before non-recurring items, but including employee stock options expenses)

Q1 Q2 Q3 Q4 Year (Mar) (Jun) (Sep) (Dec) (Dec)

2012

$1.48 A $1.68 A $1.36 A $1.58 A $6.11 A

2013

$1.63 A $1.79 A $1.77 A $2.26 A $7.66 A

2014

$2.21 E $2.33 E $2.38 E $2.57 E $9.49 E

2015

$10.41 E

1ADS= 3 Shares Projected EPS Growth - Next 5 Years % 14

February 20, 2014

http://www.Zacks.com

Equity Research SHPG |

OVERVIEW

Founded in 1986, Dublin-based Shire is a specialty biopharmaceutical company catering to diverse medical needs through research and development, manufacture, sale, and distribution of pharmaceutical products.

Shire repositioned its business in 2013 undertaking a realignment program with strategic focus on rare diseases and greater operational discipline. With an aim to reduce overlap, Shire has merged its three autonomous divisions into one. Shire re-aligned its business structure to drive growth and innovation. As per the strategy, Shire has an In-Line marketed product group and a Pipeline Group, with centralized corporate functions. The In-Line marketed products group consist of five business lines, which will focus on commercial delivery

Rare Diseases, Neuroscience (formerly Behavioral Health), Gastrointestinal (GI), Regenerative Medicine (RM) and Internal Medicine (with a focus on Adderall XR, Fosrenol and Xagrid) . The Pipeline Group consists of Research & Development (R&D) and Business Development (BD). The unit focused on late-stage development programs with pre-clinical development focus being primarily on rare diseases, led by a single R&D organization. The BD unit will focus on identifying later-stage development programs and in-market products in target specialist areas. Further, Shire will expand its footprint in Asia and Latin America with a key focus on Japan, China and Brazil.

For 2013, the company reported revenues of $4.9 billion, up 9% year over year. Product sales of $4.7 billion were up 12% from 2012. Shire also receives royalty revenues which mainly comprise income earned from the sale of the authorized generic version of Adderall XR, 3TC, Zeffix, Fosrenol, and others. Income from royalties came in at $153.7 million, down 36% from 2012.

REASONS TO BUY

ViroPharma Acquisition Holds Promise: In a bid to strengthen its portfolio of rare disease drugs, Shire recently announced that it will acquire ViroPharma for approximately $50 per share or $4.2 billion. ViroPharma's lead drug Cinryze is approved in the U.S. for routine prophylaxis against angioedema attacks in adolescent and adults with hereditary HAE. Cinryze complements Shire's Firazyr which is indicated for the on-demand treatment of acute HAE attacks. We are positive on Shire s acquisition

Key Drugs Indication Sales (in millions of dollars)

Vyvanse

Attention deficit and hyperactivity disorder (ADHD)

$1,227.8

Intuniv ADHD $334.9

Lialda Ulcerative Colitis $528.9 Pentasa Ulcerative Colitis $280.6

Fosrenol

Hyperphosphatemia in end stage renal disease $183.4

Replagal Fabry disease $467.9 Elaprase Hunter syndrome $545.6 Vpriv Gaucher disease $342.7

Firazyr hereditary angioedema or HAE

$234.8 Adderall XR ADHD $375.4

Xagrid Essential thrombocythemia $99.4


of ViroPharma which will strengthen its HAE franchise as Cinryze and Firazyr are two complementary therapies for the treatment of HAE. The acquisition of ViroPharma is expected to boost the bottom line by 7% in 2014 as compared to the earlier projected range of 5%. The addition of ViroPharma s lead drug, Cinryze, will enable it to build a rare disease business (estimated at $2 billion). The potential acquisition is expected to generate synergies over $150 million in 2015. Shire plans to evaluate a low-volume intravenous variation of Cinryze.

Strong Hold in ADHD Market: Shire holds a strong position in the ADHD market driven by key drugs like Vyvanse, Intuniv and Adderall XR. The growth engine of Shire is Vyvanse, which accounted for approximately 25.8% of total product sales in 2013, driven by a 19% increase in sales. Shire is now focused on exploring Vyvanse outside the U.S. Vyvanse (EU trade name: Elvanse) was approved in the EU in Dec 2012. Shire plans to capture 75% of the total EU market by 2014. We believe that the geographical expansion will pave the way for incremental growth. We are also encouraged by Shire s efforts for the label expansion of Vyvanse. Shire is currently developing Vyvanse for additional indications such as the binge eating disorder and expects to submit a Supplemental New Drug Application (sNDA) to the U.S. Food and Drug Administration (FDA) later in the year.

Well-Placed HGT Biz:

Shire s HGT business also looks well placed with key drugs like Elaprase, Replagal, Vpriv and Firazyr. Shire is looking to expand Firazyr s label into ACE inhibitor-induced angioedema. Following the review and discussion of the data from a small investigator sponsored trial with the EU agencies, Shire expects to withdraw its supplemental Marketing Authorization Application (MAA) which was submitted earlier in 2012. Shire will now resubmit its MAA with the data from the ongoing phase III trial which was initiated in the fourth quarter of 2013. This trial will now support both EU and U.S. registrations.

Deep Pipeline: We are positive on Shire s impressive pipeline and believe that the successful commercialization of these candidates will boost the top line.

Pipeline Expansion through Deals and Acquisitions: Shire continues to broaden its product portfolio through acquisitions and partnerships. Shire acquired FerroKin Biosciences in 2012, which brought a new hematology drug to the SP portfolio. Shire acquired Pervasis Therapeutics Inc. in 2012 as well, which added SRM-003 (currently in phase II development for acute vascular repair). The acquisition of ABH in 2011 added Dermagraft to Shire s portfolio. However, in Jan 2014, Shire entered into a

Product Indication Status Intuniv ADHD Registration in Canada

Intuniv ADHD in children and adolescents

Phase III in EU and Japan, Filing in the EU expected in 2014.

Vyvanse (LDX) Binge eating disorder in adults

Phase III in U.S.

Resolor Chronic constipation (males) Phase III in EU

Lifitegrast Dry eye disease Phase III in the U.S. SHP555 (prucalopride) Chronic constipation

Phase III-ready in U.S.

Xagrid Essential thrombocythemia

Phase III in Japan. Shire submitted a Marketing Authorisation in Japan in 4Q13.

SHP609 Hunter syndrome with CNS symptoms

Phase II/III

Maribavir Vytomegalovirus (CMV) viremia

Phase II (data expected in the first half of 2015). Orphan status in the U.S. and EU.


definitive agreement with Organogenesis Inc. to sell Dermagraft. Shire had undertaken restructuring of the sales and marketing organization of Dermagraft and the implementation of a new commercial model. However, Dermagraft no longer fits into the revised business structure of Shire and hence the company decided to divest it. Earlier, in 2010, the acquisition of Movetis added Resolor to Shire s portfolio. Resolor is approved for the treatment of chronic constipation in women in the EU and Switzerland. Further, Shire acquired the rights to market Resolor in the U.S. in 2012.

We expect the acquisitions of SARcode and Premacure (in Apr 2013 and Mar 2013, respectively) to develop a new business unit in ophthalmology for Shire. While the acquisition of SARcode added a phase III candidate, lifitegrast (signs and symptoms of dry eye disease), to its pipeline, the acquisition of Premacure has added a potential protein replacement therapy, premiplex, for the prevention of retinopathy of prematurity to Shire s pipeline (phase II data expected in the first half of 2015).

Recent Patent Wins: The patent wins against Impax (Adderall XR), Teva (Intuniv) and Actavis (Intuniv and Lialda) has removed a major overhang on the shares. The delay in the entry of generic competition for these products bodes well for the company.

Geographic Expansion and Reorganization: Shire continues to work on developing its business in Asia and Latin America. The company recently opened an office in Japan and plans are underway for a potential launch of Vyvanse there. Meanwhile, China and Brazil also continue to be key geographic areas of focus. Shire continues to work on developing its business in Asia and Latin America. The company recently opened an office in Japan and plans are underway for a potential launch of Vyvanse there. Meanwhile, China and Brazil also continue to be key geographic areas of focus. Shire recently announced that it will cut jobs at its site in Basingstoke as a part of its reorganization program. As Shire has decided to pursue development programs with a focus on rare diseases only, it discontinued all other development programs. The program has been discontinued at the company s Basingstoke site and will result in a significant decrease in the R&D spend. Shire also expects to cut a few jobs resulting from the cessation of this program. With an aim to reduce overlap, Shire has merged its three autonomous divisions into one. Meanwhile, Shire is also planning to re-locate its Swiss operations from Eysins to Zug. Shire s efforts to build a leaner organization with better focus on rare diseases should lead to improved margins. The company expects $0.25 billion in cost savings in 2013 from these actions. The savings should result in earnings accretion as well by the end of 2013.

FDA Issues CRL for Lexington facility:

The FDA approved a third manufacturing facility at Massachusetts, U.S. for the production of active pharmaceutical ingredient (API) in type I Gaucher disease drug, Vpriv. Shire had earlier received a complete response letter (CRL) for the production of Vpriv's API at the Lexington, Mass. manufacturing facility. Shire intends to add a manufacturing capacity in the Lexington facility to support the rapid growth of Vpriv and Replagal. The facility was initially approved for the purification of Replagal API. Subsequently, Shire submitted regulatory filings with both the European Medicines Agency (EMA) and the FDA for the production of Vpriv API at the new facility in Nov 2011. The EMA s Committee for Medicinal Products for Human Use has approved the production of Vpriv in this facility in Feb 2012, which was later adopted by the European Commission in Mar 2012. Shire has submitted its response to the matters raised by the FDA in Oct 2012.

RISKS

Generic Competition Poses Challenges: The U.S. ADHD market is highly genericized given the presence of authorized generic versions of Johnson & Johnson s Concerta, Novartis Ritalin LA, authorized generic and generic Adderall XR, and Shionogi s Kapvay. Shire s share of the U.S. ADHD


prescription market declined to 26.6% in Dec 2012 from 27.9% in the year-ago period. Although Shire sells authorized generic versions of Adderall XR to Teva and Impax, competition has increased in the ADHD market in the U.S. with the U.S. Food and Drug Administration (FDA) granting approval to Actavis and Teva for their generic versions of Adderall XR in Jun 2012 and Feb 2013. The entry of generics led to a 12.0% decline in sales of Adderall XR in 2013. Moreover, Pfizer launched its ADHD treatment, Quillivant XR in Jan 2013 thereby further increasing competition. Meanwhile, the launch of generic versions of Intuniv by Actavis in Dec 2014 and thereafter Teva will impact sales going forward. The entry of generics will adversely impact sales and we will reconsider our recommendation in such a scenario.

Setback for Shire:

Shire suffered a setback when Vyvanse failed to meet the primary efficacy

endpoint in two pivotal phase III studies (SPD489-322 and SPD489-323) even though the safety profile of Vyvanse was consistent with other studies in adults with ADHD. Shire was evaluating the efficacy and safety of Vyvanse in the two phase III studies as compared to placebo as an adjunctive treatment for major depressive disorder (MDD) in adults who did not adequately respond to antidepressants. As Vyvanse did not meet the primary efficacy endpoint versus placebo for either study, the disappointing results of the trials have forced Shire to discontinue the clinical development program. In addition, Shire is also evaluating lifitegrast for the treatment of dry eye disease. However, lifitegrast did not meet its prespecified co-primary endpoint in a phase III study. Hence, Shire intends to investigate the full data from the study and plans to further discuss with the FDA in the first half of 2014 on the future development program.

RECENT NEWS

FDA Approves Shire's New Manufacturing Facility For Vpriv Feb 14, 2014

Shire recently received positive news when the FDA approved a third manufacturing facility at Massachusetts, U.S. for the production of active pharmaceutical ingredient (API) in type I Gaucher disease drug, Vpriv.

The news should relieve Shire as it had received a complete response letter (CRL) for the production of Vpriv's API at the Lexington, Mass. manufacturing facility.

Shire intends to add a manufacturing capacity in the Lexington facility to support the rapid growth of Vpriv and Replagal. The facility was initially approved for the purification of Replagal API. Subsequently, Shire submitted regulatory filings with both the European Medicines Agency (EMA) and the FDA for the production of Vpriv API at the new facility in Nov 2011. The EMA s Committee for Medicinal Products for Human Use has approved the production of Vpriv in this facility in Feb 2012, which was later adopted by the European Commission in Mar 2012. Shire has submitted its response to the matters raised by the FDA in Oct 2012.

Shire Beats in Fourth Quarter, Positive Guidance Feb 13, 2014

Shire reported fourth quarter 2013 earnings (excluding special items and amortization) of $2.26 per American Depositary Share (ADS), up from $1.66 per ADS in the year-ago quarter and beating the Zacks Consensus Estimate of $2.03.

Quarterly revenues increased 12% to $1.3 billion, in line with the Zacks Consensus Estimate. The increase in revenues was driven by a robust growth in product sales.

Quarter in Detail


Product sales went up 19% to $1.3 billion. The growth was driven by attention deficit hyperactivity disorder (ADHD) drug Vyvanse (up 29% to $330 million) ulcerative colitis drug Lialda (up 34% to $149 million) and Vpriv (up 17% to $91 million), and hereditary angioedema (HAE) drug Firazyr (up 134% to $81 million). Sales of Fabry disease drug Replagal (up 11% to $131.3 million) also increased.

However, sales of thrombocythemia drug Xagrid (down 5% to $25.3 million) and ulcerative colitis drug Pentasa (down 5% to $65.4 million) declined. Royalties declined 53% to $41.3 million in the fourth quarter primarily due to lower Adderall XR royalties.

Adjusted research & development (R&D) costs declined 3.7% to $222.0 million in the reported quarter. Selling, general & administrative (SG&A) expenses increased 0.7% to $387.7 million.

Full Year 2013 Details

Shire reported full year 2013 revenues of $4.9 million, up 9% from a year ago and in line with the Zacks Consensus Estimate. Earnings per share came in at $7.66, up 23% from the year ago and easily beating the Zacks Consensus Estimate of $7.27.

2014 Outlook

Shire acquired all of the outstanding shares of erstwhile ViroPharma for $50 per share in cash or approximately $4.23 billion.

Shire expects to achieve mid-to-high teens product sales growth in 2014 driven by addition of ViroPharma business. Royalties and other revenues are expected to decline by 10% 15% in 2014 from 2013 levels.

Shire expects earnings in 2014 to grow at a similar growth rate in 2013 (roughly 23.0%).

Pipeline Update

Shire is looking to expand Firazyr s label into ACE inhibitor-induced angioedema. Following the review and discussion of the data from a small investigator sponsored trial with the EU agencies, Shire expects to withdraw its supplemental Marketing Authorization Application (MAA) which was submitted earlier in 2012.

Shire will now resubmit its MAA with the data from the ongoing phase III trial which was initiated in the fourth quarter of 2013. This trial will now support both EU and U.S. registrations.

Meanwhile, Shire was evaluating the efficacy and safety of Vyvanse as an adjunctive treatment for major depressive disorder (MDD) in adults who did not adequately respond to antidepressants. However, Vyvanse did not meet the primary efficacy endpoint in the phase III trials and Shire has decided to discontinue the clinical development program.

Nevertheless, Shire is evaluating Vyvanse for the indication of binge eating disorder (BED) and expects to submit a Supplemental New Drug Application (sNDA) to the U.S. Food and Drug Administration (FDA) later in the year.

Shire is also evaluating lifitegrast for the treatment of dry eye disease. However, lifitegrast did not meet its prespecified co-primary endpoint in a phase III study. Hence, Shire intends to investigate the full data from the study and plans to further discuss with the FDA in the first half of 2014 on the future development program.


Other Developments

Shire announced that the chief financial officer (CFO), Graham Hetherington, has resigned and will step down effective Mar 2014.

Setback for Vyvanse Feb 6, 2014

Shire recently suffered a setback when Vyvanse failed to meet the primary efficacy endpoint in two pivotal phase III studies (SPD489-322 and SPD489-323) even though the safety profile of Vyvanse was consistent with other studies in adults with ADHD. Shire was evaluating the efficacy and safety of Vyvanse in the two phase III studies as compared to placebo as an adjunctive treatment for major depressive disorder (MDD) in adults who did not adequately respond to antidepressants.

As Vyvanse did not meet the primary efficacy endpoint versus placebo for either study, the disappointing results of the trials have forced Shire to discontinue the clinical development program. Nevertheless, Shire is evaluating Vyvanse for the indication of binge eating disorder (BED) and expects to submit a filing to the FDA later in the year.

Shire Acquires ViroPharma Jan 24, 2014

In a bid to strengthen its portfolio of rare disease drugs, Shire announced that it acquired ViroPharma for approximately $50 per share or $4.2 billion. The offer price of $50.00 per share represents a 27% premium to ViroPharma's closing share price of $39.38 on Nov 8, 2013, the last trading day prior to the acquisition announcement.

In addition to its existing cash balance, Shire expects to finance the acquisition with a $1.7 billion fully underwritten short-term bank facility and a revolving credit facility of $1.2 billion.

ViroPharma focuses on rare diseases. The growth story for ViroPharma revolves around Cinryze, which is approved in the U.S. for routine prophylaxis against angioedema attacks in adolescent and adults with HAE. ViroPharma was evaluating Cinryze for additional potential indications such as autoimmune hemolytic anemia, antibody-mediated rejection post renal transplantation and neuromyelitis optica.

The acquisition will also add Plenadren

indicated for the treatment of adrenal insufficiency (AI), and Buccolam indicated for the treatment of pediatric seizures, to Shire s portfolio.

Further, ViroPharma s pipeline candidates include maribavir (for the treatment of cytomegalovirus infection in transplant patients), VP20621 (for the prevention of recurrent clostridium difficile infection) and VP-20629 (for Friedreich's Ataxia). Shire will decide on these programs after reviewing its resources.

ViroPharma forecasted net revenues between $445 million and $465 million in 2013. Cinryze revenues are projected between $395 million and $405 million. Shire expects the addition of Cinryze to its rare disease business unit will propel the revenues to grow over $2 billion in 2014, accounting for approximately 40% of Shire's total product sales. Moreover, Shire expects to realize approximately $150 million of annual cost synergies across the business by 2015 from the acquisition. The acquisition is expected to be immediately accretive to Shire s bottom line.

Shire Sells Dermagraft Jan 17, 2014

Shire entered into a definitive agreement with Organogenesis Inc. to sell Dermagraft. Shire acquired Dermagraft through the acquisition of Advanced BioHealing in 2011, thereby creating a separate business unit, Regenerative Medicine. Dermagraft is approved for the treatment of diabetic foot ulcers in


the U.S. and Canada. Shire had undertaken restructuring of the sales and marketing organization of Dermagraft and the implementation of a new commercial model.

However, Dermagraft no longer fits into the revised business structure of Shire and hence the company decided to divest it. As per the agreement, Shire will receive no upfront payment from Organogenesis. However, Shire is entitled to receive up to $300 million cash in milestone payments assuming Organogenesis meets certain annual net sales targets through 2018.

Shire to Cut Jobs Nov 7, 2013

Shire announced that it will cut jobs as its site in Basingstoke as a part of its reorganisation program. As Shire has decided to pursue development programs with a focus on rare diseases only, it discontinued all other development programs.

The programmes have been discontinued at the company s Basingstoke site and will result in a significant decrease in the R&D spend. Shire also expects to cut a few jobs resulting from the cessation of these programmes.

Label Expansion for Shire s Vyvanse Nov 5, 2013

Shire announced positive top-line results from two phase III studies on ADHD drug Vyvanse for additional indications. Shire is developing Vyvanse for additional indications such as the treatment of negative symptoms of schizophrenia and binge eating disorder (BED). The two randomized phase III studies were conducted to evaluate the safety and efficacy of Vyvanse compared to placebo in adults with BED. The results from the study showed that Vyvanse was statistically superior to placebo on the primary efficacy analysis and maintains a safety profile. Consequently, Shire plans to submit a Supplemental New Drug Application (sNDA) to the U.S. Food and Drug Administration for the treatment of BED in adults (ages 18 to 55) by the third quarter of 2014.

VALUATION

Shire reported fourth quarter 2013 earnings (excluding special items and amortization) of $2.26 per ADS), up from $1.66 per ADS in the year-ago quarter and beat the Zacks Consensus Estimate of $2.03.Quarterly revenues increased 12% to $1.3 billion, in line with the Zacks Consensus Estimate. The increase in revenues was driven by a robust growth in product sales. Shire is well placed in the ADHD market thanks to key drug Vyvanse, which is now being developed for an additional indication as well.

We are impressed by strong fourth quarter results. Shire repositioned its business in 2013 undertaking a realignment program with strategic focus on rare diseases and greater operational discipline. The acquisition of ViroPharma is expected to boost the bottom line by 7% in 2014 as compared to the earlier projected range of 5%. The addition of ViroPharma s lead drug, Cinryze, will enable it to build a rare disease business (estimated at $2 billion). Meanwhile, Shire s efforts to realign its business structure to drive growth and innovation are noteworthy. The realignment is expected to drive improved operating leverage in 2014 and 2015.

The stock is currently trading at a 2014 P/E multiple of 17.5x, compared to the S&P 500 multiple of 15.6x. The stock has traded between 8.1x and 22.1x in the past five years. Shire is currently trading at a 52-week high of $165.78. We expect further upside from current levels and hence maintain our Outperform recommendation. Our target price of $199.00 is based on 21.0x our 2014 EPADS estimate.


Key Indicators

P/E F1

P/E F2

Est. 5-Yr

EPS Gr%

P/CF (TTM)

P/E (TTM)

P/E 5-Yr High

(TTM)

P/E 5-Yr Low

(TTM) Shire Plc (SHPG) 17.5 15.9 14.0 20.9 21.6 22.1 8.1

Industry Average 103.6 54.2 19.5 22.0 31.6 70.9 8.4 S&P 500 15.6 14.6 10.7 14.9 17.9 27.7 12.0

Eisai Co., Ltd. (ESALY) 27.3 28.3 2.8 10.8 23.5 26.3 10.2 Merck KGaA (MKGAF) 40.6 41.3 1.8 7.7 21.2 26.1 14.4 Zoetis Inc. (ZTS) 16.7 14.1 24.0 18.4 28.0 50.1 7.1 Valeant Pharmaceuticals, Inc. (VRX) 19.3 16.9 15.4 19.3 21.0 31.9 21.4

TTM is trailing 12 months; F1 is 2014 and F2 is 2015, CF is operating cash flow

P/B Last Qtr.

P/B 5-Yr High

P/B 5-Yr Low

ROE (TTM)

D/E Last Qtr.

Div Yield Last Qtr.

EV/EBITDA (TTM)

SHIRE PLC-ADR (SHPG) 6.7 6.7 4.1 33.5 0.0 0.4 23.0

Industry Average 13.9 13.9 13.9 -136.8 0.2 0.1 0.3 S&P 500 4.8 9.8 2.9 25.4

2.1


Earnings Surprise and Estimate Revision History


DISCLOSURES & DEFINITIONS

The analysts contributing to this report do not hold any shares of SHPG. The EPS and revenue forecasts are the Zacks Consensus estimates. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy or sell the securities from time to time. Zacks uses the following rating system for the securities it covers. Outperform- Zacks expects that the subject company will outperform the broader U.S. equity market over the next six to twelve months. Neutral- Zacks expects that the company will perform in line with the broader U.S. equity market over the next six to twelve months. Underperform- Zacks expects the company will under perform the broader U.S. Equity market over the next six to twelve months. The current distribution of Zacks Ratings is as follows on the 1031 companies covered: Outperform - 14.4%, Neutral - 79.4%, Underperform

5.5%. Data is as of midnight on the business day immediately prior to this publication.

Our recommendation for each stock is closely linked to the Zacks Rank, which results from a proprietary quantitative model using trends in earnings estimate revisions. This model is proven most effective for judging the timeliness of a stock over the next 1 to 3 months. The model assigns each stock a rank from 1 through 5. Zacks Rank 1 = Strong Buy. Zacks Rank 2 = Buy. Zacks Rank 3 = Hold. Zacks Rank 4 = Sell. Zacks Rank 5 = Strong Sell. We also provide a Zacks Industry Rank for each company which provides an idea of the near-term attractiveness of a company s industry group. We have 264 industry groups in total. Thus, the Zacks Industry Rank is a number between 1 and 264. In terms of investment attractiveness, the higher the rank the better. Historically, the top half of the industries has outperformed the general market. In determining Risk Level, we rely on a proprietary quantitative model that divides the entire universe of stocks into five groups, based on each stock s historical price volatility. The first group has stocks with the lowest values and are deemed Low Risk, while the 5th group has the highest values and are designated High Risk. Designations of Below-Average Risk, Average Risk, and Above-Average Risk correspond to the second, third, and fourth groups of stocks, respectively.

Analyst Ekta Bagri

Copy Editor Bipasha Chowdhury

QCA Arpita Dutt

Reason for Update 4Q13 Earnings

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