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Can Horizon (HZNP) Surprise Earnings Estimates in Q2?
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Horizon Pharma plc is scheduled to report second-quarter 2016 results on Aug 8, before the opening bell. Horizon Pharma’s performance has been far from encouraging with the company missing earnings estimates on two occasions while surpassing in one. Yet, the company has an average positive earnings surprise of 4.46%.
In the last reported quarter, the company recorded a negative earnings surprise of 10.53%. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
At the time of announcing first-quarter 2016 results, Horizon Pharma reiterated its net sales and adjusted EBITDA expectations for the second quarter and full year 2016, which was provided in Apr 2016. The company continues to expect 2016 net sales in the range of $1.025 billion to $1.050 billion and adjusted EBITDA in the range of $505 million to $520 million (expects a reduction of roughly $10 million due to the impending acquisition of global rights to Actimmune). While 22–23% of net sales are expected in the second quarter of 2016, the company projects adjusted EBITDA to be approximately 21–22% also in the second quarter of 2016.
We note that Horizon Pharma entered into an agreement in May 2016 under which it will acquire the global rights to Actimmune from Boehringer Ingelheim. Horizon Pharma currently owns the rights to Actimmune in the U.S., Canada, and Japan. The transaction is expected to close by the end of 2016.
Meanwhile, Horizon Pharma continued to focus its efforts on expanding the label of Actimmune and Ravicti. While patient enrolment in a phase III study (STEADFAST) on Actimmune for Friedreich's ataxia was completed in May 2016, the company filed a supplemental new drug application with the FDA for Ravicti toward the end of the quarter. The company is looking to expand the age range for chronic management of urea cycle disorders in adult and pediatric patients from two months of age to two years of age and older.
As far as the company’s business units are concerned, Orphan, Primary Care, and Rheumatology should continue to perform well. The company is constantly expanding its sales and marketing efforts in Rheumatology and Primary Care, which should continue to drive prescription growth of existing and newly acquired medicines.
Particularly, the company is increasing promotional efforts and working on expanding commercial efforts for Krystexxa (became part of the company’s portfolio following the Jan 2016 Crealta Holdings acquisition). As a result, the company expects to witness accelerated volume growth of Krystexxa in the second half of 2016.
On the second-quarter call, focus will be on the performance of the business units along with the performance of products including Actimmune, Krystexxa and others. Another key area of focus will be the company’s business development plans for the rest of the year.
Earnings Whispers
Our proven model does not conclusively show that Horizon Pharma 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. 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 at 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 53 cents per share.
Zacks Rank: Horizon Pharma currently carries a Zacks Rank #3. The stock’s Zacks Rank #3 when combined with an ESP of 0.00% makes surprise prediction difficult.
Note that 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.
Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter. These stocks carry a Zacks Rank #2 and are scheduled to report second-quarter results on Aug 9.
The Earnings ESP for Impax Laboratories Inc. is +3.03%.
Mylan N.V. has an Earnings ESP of +1.75%.
The Earnings ESP for Ionis Pharmaceuticals, Inc. (IONS - Free Report) is +38.00%.
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 >>
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Can Horizon (HZNP) Surprise Earnings Estimates in Q2?
Horizon Pharma plc is scheduled to report second-quarter 2016 results on Aug 8, before the opening bell. Horizon Pharma’s performance has been far from encouraging with the company missing earnings estimates on two occasions while surpassing in one. Yet, the company has an average positive earnings surprise of 4.46%.
In the last reported quarter, the company recorded a negative earnings surprise of 10.53%. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
At the time of announcing first-quarter 2016 results, Horizon Pharma reiterated its net sales and adjusted EBITDA expectations for the second quarter and full year 2016, which was provided in Apr 2016. The company continues to expect 2016 net sales in the range of $1.025 billion to $1.050 billion and adjusted EBITDA in the range of $505 million to $520 million (expects a reduction of roughly $10 million due to the impending acquisition of global rights to Actimmune). While 22–23% of net sales are expected in the second quarter of 2016, the company projects adjusted EBITDA to be approximately 21–22% also in the second quarter of 2016.
We note that Horizon Pharma entered into an agreement in May 2016 under which it will acquire the global rights to Actimmune from Boehringer Ingelheim. Horizon Pharma currently owns the rights to Actimmune in the U.S., Canada, and Japan. The transaction is expected to close by the end of 2016.
Meanwhile, Horizon Pharma continued to focus its efforts on expanding the label of Actimmune and Ravicti. While patient enrolment in a phase III study (STEADFAST) on Actimmune for Friedreich's ataxia was completed in May 2016, the company filed a supplemental new drug application with the FDA for Ravicti toward the end of the quarter. The company is looking to expand the age range for chronic management of urea cycle disorders in adult and pediatric patients from two months of age to two years of age and older.
As far as the company’s business units are concerned, Orphan, Primary Care, and Rheumatology should continue to perform well. The company is constantly expanding its sales and marketing efforts in Rheumatology and Primary Care, which should continue to drive prescription growth of existing and newly acquired medicines.
Particularly, the company is increasing promotional efforts and working on expanding commercial efforts for Krystexxa (became part of the company’s portfolio following the Jan 2016 Crealta Holdings acquisition). As a result, the company expects to witness accelerated volume growth of Krystexxa in the second half of 2016.
On the second-quarter call, focus will be on the performance of the business units along with the performance of products including Actimmune, Krystexxa and others. Another key area of focus will be the company’s business development plans for the rest of the year.
Earnings Whispers
Our proven model does not conclusively show that Horizon Pharma 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. 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 at 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 53 cents per share.
Zacks Rank: Horizon Pharma currently carries a Zacks Rank #3. The stock’s Zacks Rank #3 when combined with an ESP of 0.00% makes surprise prediction difficult.
Note that 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.
HORIZON PHARMA Price and EPS Surprise
HORIZON PHARMA Price and EPS Surprise | HORIZON PHARMA Quote
Stocks that Warrant a Look
Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter. These stocks carry a Zacks Rank #2 and are scheduled to report second-quarter results on Aug 9.
The Earnings ESP for Impax Laboratories Inc. is +3.03%.
Mylan N.V. has an Earnings ESP of +1.75%.
The Earnings ESP for Ionis Pharmaceuticals, Inc. (IONS - Free Report) is +38.00%.
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 >>