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Alexion (ALXN) Q2 Earnings: Stock Likely to Disappoint
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Alexion Pharmaceuticals, Inc. is scheduled to report second-quarter 2016 results on Jul 28, before the opening bell. The company’s track record has been far from encouraging. Over the last four reported quarters, the company posted an average negative earnings surprise of 0.87%, having beaten estimates in only one quarter while missing in the rest.
Last quarter, the company recorded a negative earnings surprise of 4.40%. Let’s see how things are shaping up for this announcement.
Factors Likely to Impact Q2 Results
At the time of announcing first-quarter 2016 results, Alexion lowered its 2016 revenue guidance for Soliris primarily due to increased macroeconomic weakness in Latin America. Soliris revenues are expected in the range of $2.835–$2.875 billion in 2016, down from the previous guidance of $2.9–$2.925 billion. Owing to this, the company also revised its revenue outlook for 2016. Alexion expects revenues to be at the low end of the prior forecast of $3.05–$3.1 billion.
In the second quarter of 2016, revenues are expected in the range of $735 million to $745 million, including foreign exchange headwinds of $20 million to $25 million.
The company had also guided expenses at the high end of the prior projection mainly due to investment in pipeline, expansion of the global commercial launches of Strensiq and Kanuma and unfavorable currency movement. As a result, the company projected 2016 earnings to be at the low end of the previous projection of $5.00–$5.20 per share. The company projects earnings in the range of $1.12–$1.17 per share in the second quarter of 2016.
Alexion’s key growth driver Soliris continued to perform well in the first quarter of 2016 in core territories including the U.S., Europe and Japan, driven by a consistently high number of new patients in paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome indications. However, Soliris’ revenue growth was curbed by increasing macroeconomic weakness in Latin America, resulting in soft new patient starts and treatment interruptions, primarily in Brazil and Argentina. Currency headwinds and seasonality also had an adverse impact on Soliris sales.
Meanwhile, Alexion is working on the launches of both Strensiq and Kanuma by creating greater awareness through diagnostic and disease education programs. The company has initiated the funding process with healthcare authorities in other major EU countries for both products. It expects to launch these drugs in initial countries outside Germany in the second half of the year and beyond.
On the second-quarter call, investor focus will be on the company’s performance, sales ramp up of Strensiq and Kanuma along with an update on the impact of macroeconomic issues on Soliris.
Our proven model does not conclusively show that Alexion is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to likely post an earnings beat. However, that is not the case here, as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00% since both the Most Accurate and the Zacks Consensus Estimate are at 91 cents per share.
Zacks Rank: Alexion currently has a Zacks Rank #5 (Strong Sell).
As it is, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some health care stocks that you may want to consider as our model shows that they too have the right combination of elements to post an earnings beat this quarter.
Amgen Inc. (AMGN - Free Report) has an Earnings ESP of +1.10% and a Zacks Rank #3. It is scheduled to report second-quarter results on Jul 27.
United Therapeutics Corporation (UTHR - Free Report) has an Earnings ESP of +3.37% and a Zacks Rank #2. It is scheduled to report second-quarter results on Jul 28.
Bristol-Myers Squibb Company (BMY - Free Report) has an Earnings ESP of +1.49% and a Zacks Rank #1. It is scheduled to report second-quarter results on Jul 28.
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Alexion (ALXN) Q2 Earnings: Stock Likely to Disappoint
Alexion Pharmaceuticals, Inc. is scheduled to report second-quarter 2016 results on Jul 28, before the opening bell. The company’s track record has been far from encouraging. Over the last four reported quarters, the company posted an average negative earnings surprise of 0.87%, having beaten estimates in only one quarter while missing in the rest.
Last quarter, the company recorded a negative earnings surprise of 4.40%. Let’s see how things are shaping up for this announcement.
Factors Likely to Impact Q2 Results
At the time of announcing first-quarter 2016 results, Alexion lowered its 2016 revenue guidance for Soliris primarily due to increased macroeconomic weakness in Latin America. Soliris revenues are expected in the range of $2.835–$2.875 billion in 2016, down from the previous guidance of $2.9–$2.925 billion. Owing to this, the company also revised its revenue outlook for 2016. Alexion expects revenues to be at the low end of the prior forecast of $3.05–$3.1 billion.
In the second quarter of 2016, revenues are expected in the range of $735 million to $745 million, including foreign exchange headwinds of $20 million to $25 million.
The company had also guided expenses at the high end of the prior projection mainly due to investment in pipeline, expansion of the global commercial launches of Strensiq and Kanuma and unfavorable currency movement. As a result, the company projected 2016 earnings to be at the low end of the previous projection of $5.00–$5.20 per share. The company projects earnings in the range of $1.12–$1.17 per share in the second quarter of 2016.
Alexion’s key growth driver Soliris continued to perform well in the first quarter of 2016 in core territories including the U.S., Europe and Japan, driven by a consistently high number of new patients in paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome indications. However, Soliris’ revenue growth was curbed by increasing macroeconomic weakness in Latin America, resulting in soft new patient starts and treatment interruptions, primarily in Brazil and Argentina. Currency headwinds and seasonality also had an adverse impact on Soliris sales.
Meanwhile, Alexion is working on the launches of both Strensiq and Kanuma by creating greater awareness through diagnostic and disease education programs. The company has initiated the funding process with healthcare authorities in other major EU countries for both products. It expects to launch these drugs in initial countries outside Germany in the second half of the year and beyond.
On the second-quarter call, investor focus will be on the company’s performance, sales ramp up of Strensiq and Kanuma along with an update on the impact of macroeconomic issues on Soliris.
ALEXION PHARMA Price and EPS Surprise
ALEXION PHARMA Price and EPS Surprise | ALEXION PHARMA Quote
What Our Model Indicates
Our proven model does not conclusively show that Alexion is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to likely post an earnings beat. However, that is not the case here, as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00% since both the Most Accurate and the Zacks Consensus Estimate are at 91 cents per share.
Zacks Rank: Alexion currently has a Zacks Rank #5 (Strong Sell).
As it is, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some health care stocks that you may want to consider as our model shows that they too have the right combination of elements to post an earnings beat this quarter.
Amgen Inc. (AMGN - Free Report) has an Earnings ESP of +1.10% and a Zacks Rank #3. It is scheduled to report second-quarter results on Jul 27.
United Therapeutics Corporation (UTHR - Free Report) has an Earnings ESP of +3.37% and a Zacks Rank #2. It is scheduled to report second-quarter results on Jul 28.
Bristol-Myers Squibb Company (BMY - Free Report) has an Earnings ESP of +1.49% and a Zacks Rank #1. It is scheduled to report second-quarter results on Jul 28.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>