Pimple Killer Genomma Advances Most Since 2009 After Earnings

  • Stock climbs after sales, profit exceed analysts' forecasts
  • Company reports stronger-than-expected revenue in U.S., Mexico

Genomma Lab Internacional SAB, the Mexican seller of remedies for acne and baldness, jumped the most since May 2009 after earnings beat analysts’ estimates.

The maker of products including Tio Nacho Mexican Herbs Shampoo and Cicatricure Scar Gel surged after citing stronger-than-expected sales in both Mexico and U.S. during the first quarter and as Credit Suisse Group AG raised its recommendation for the stock to the equivalent of buy. The shares climbed 12 percent to 17.31 pesos in Mexico City, after jumping as much as 16 percent earlier Thursday.

It’s “time to come back,” Credit Suisse analysts led by Antonio Gonzalez said in a note to clients. “We think Genomma Lab is on its way to complete the first stage of its turnaround: destocking of inventories. Longer-term management will have to prove its ability to rebuild the business.”

Stronger businesses with new and existing clients including CVS Health Corp., Rite Aid Corp. and AmerisourceBergen Corp. drove a 54 percent jump in net revenue for Genomma’s U.S. operations during the first quarter, the company said in a statement. While sales in Latin America decreased in the span because of the economic weakness in Brazil and other countries, revenue from Mexico was 25 percent bigger than what Genomma forecast.

The Mexican drug company has been trying to win investors back after the stock plunged more than 50 percent last year amid a slump in its home market. Chief Executive Officer Maximo Juda, who took over in July from Chairman Rodrigo Herrera, said last year that Genomma shelved a previous plan to license out about 20 non-core brands and will use its cash to buy back shares, pay down debt and potentially acquire competing brands starting in 2016.

“We’re going to deliver what we promised,” Juda said in an interview in November. “It might be a more boring company, but it will be a more credible and a delivery-oriented company.”

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