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Why Is Jazz (JAZZ) Down 1.5% Since Last Earnings Report?

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A month has gone by since the last earnings report for Jazz Pharmaceuticals (JAZZ - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Jazz due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Jazz Pharmaceuticals Q1 Earnings and Sales Miss Estimates

Jazz Pharmaceuticals reported adjusted earnings of $3.73 per share for the first quarter of 2022, missing the Zacks Consensus Estimate of $3.75. Earnings declined 4.8% year over year.

Total revenues in the reported quarter rose 33.9% year over year to $813.7 million but missed the Zacks Consensus Estimate of $852.43 million. The year-over-year increase was driven by sales of new drugs and drugs added from the acquisition of GW Pharmaceuticals.

Net product sales increased 34.2% from the year-ago quarter to $809.8 million. Royalties and contract revenues declined 4.1% to $3.9 million in the quarter.

Neuroscience Products

Sales of Jazz’s neuroscience products increased 44.8% to $612.1 million.

Net product sales for the combined oxybate business (Xyrem + Xywav) increased 5.5% to $433.6 million in the quarter. Sales of Xyrem, approved to treat cataplexy and excessive daytime sleepiness (“EDS”) in narcolepsy patients, declined 26% year over year to $247.5 million due to patients switching to Xywav. Jazz expects an authorized generic version of Xyrem to be launched by Hikima Pharmaceuticals in the second half of 2022.

Xywav is a low sodium formulation and a Xyrem follow-on product to treat EDS or cataplexy in narcolepsy patients. Xywav recorded sales of $186.1 million in the quarter compared with $182.7 million in the previous quarter. At the end of the first quarter, Jazz had approximately 7,800 active Xywav patients, up from 6,900 at the end of fourth-quarter 2021.

Jazz launched Xyway for a new indication — idiopathic hypersomnia (IH) — in November 2021. The company reported the favorable launch uptake of the drug in IH indication during the quarter. The company ended the first quarter with approximately 750 active Xywav patients with IH compared with 250 patients as of the end of the fourth quarter.

Sunosi recorded sales of $15.9 million in the quarter, up 36.8%.

Sales of Epidiolex/Epidyolex rose 6% (on a proforma basis) to $157.9 million. Jazz is making significant progress with respect to the launch of Epidyolex in Europe.

Sativex recorded sales of $4.7 million in the quarter.

Oncology Products

Oncology product sales increased 10.5% to $196.8 million.

New drug Zepzelca (lurbinectedin) recorded sales of $59.3 million in the quarter compared with $64.8 million in the previous quarter. However, sales increased 9.2% year over year.

Acute myeloid leukemia drug, Vyxeos generated sales of $33.8 million, up 1.8% from the year-ago period.

New drug Rylaze recorded sales of $54.2 million in the quarter compared with $65.0 million in the previous quarter. Although drug sales declined sequentially, Jazz stated that demand remained strong during the first quarter. Rylaze was launched in July in the United States for treating acute lymphoblastic leukemia patients who have developed hypersensitivity to E.coli-derived asparaginase. Regulatory applications in Europe are expected to be filed in mid-2022.

Defitelio sales were almost flat year over year at $49.5 million in the quarter.

Cost Discussion

Adjusted selling, general and administrative (SG&A) expenses rose 13.3% to $258.7 million to support higher headcount costs and recent launches. Adjusted research and development (R&D) expenses surged 71.4% to $116.5 million mainly to support ongoing clinical activities of pipeline candidates of GW Pharmaceuticals as well as for a couple of other candidates.

2022 Guidance Raised

The company raised its guidance for revenues and adjusted earnings in 2022. The company expects adjusted earnings to be in the range of $16.70-$17.70 per share versus the previous guidance of $16.00-$17.00 per share. The Zacks Consensus Estimate stands at $16.51 per share.

Total revenues are now expected to be in the range of $3.5-$3.7 billion, up from the previously guided range of $3.46-$3.66 billion. In 2022, Jazz expects at least 65% of net product sales to come from newly approved or acquired products.

Neuroscience sales are now expected in the range of $2.6 billion-$2.8 billion compared with $2.56 billion-$2.76 billion guided previously. The sales guidance for the Oncology franchise remains the same in the range of $840 million-$920 million.

Adjusted SG&A expenses are anticipated to be between $1.08 billion and $1.13 billion, down from the previous guidance range of $1.12-$1.19 billion. Adjusted R&D expenses are expected to be in the band of $560 million to $600 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

Currently, Jazz has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Jazz has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Jazz belongs to the Zacks Medical - Drugs industry. Another stock from the same industry, Catalent (CTLT - Free Report) , has gained 10% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Catalent reported revenues of $1.27 billion in the last reported quarter, representing a year-over-year change of +20.9%. EPS of $1.04 for the same period compares with $0.82 a year ago.

Catalent is expected to post earnings of $1.13 per share for the current quarter, representing a year-over-year change of -2.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.7%.

Catalent has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.


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