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Does Questcor Pharmaceuticals Inc (QCOR)’s Dividend Have Room to Soar?

Published on March 14, 2013 at 11:46 am by The Motley Fool in News

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Future growth
Up to this point, we’ve looked at Questcor’s dividend in the past, and we’ve also seen how its stock is being perceived by the market today. However, the most important factor to consider when understanding a dividend’s future is where the company’s cash flow is heading. It’s hard to generate more cash without growing sales, so let’s take a look at what industry analysts are expecting for Questcor’s revenue growth relative to peers this year.

Foolish bottom line
So let’s summarize, Questcor Pharmaceuticals Inc (NASDAQ:QCOR)’s recently initiated dividend ate up only a tiny portion of its cash flows last year, the stock trades well below industry averages, and the company is set to grow revenue at over 30% this year. On these metrics alone, Questcor has plenty of room to raise its dividend and looks like a screaming buy. However, digging a little further into the company’s story suggests some degree of caution is merited before buying.

Questcor relies on Acthar, its one and only drug, for all of its revenue. Relying on a single product is a big risk for any company, and over the past year long-term uncertainty has been introduced in the form of insurance coverage concerns. Given its high price, and often debated effectiveness, investors will likely continue to doubt Acthar, and consequently Questcor’s future.

The article Does Questcor’s Dividend Have Room to Soar? originally appeared on Fool.com.

Brenton Flynn has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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NASDAQ:QCOR Questcor Pharmaceuticals Inc. (QCOR)