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Conatus (CNAT) Q3 Earnings: What's in Store for the Stock?

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Conatus Pharmaceuticals Inc. is expected to report third-quarter 2016 results on Nov 2. Conatus’ performance so far has been impressive, with the company surpassing expectations on three occasions, while posting in-line results in one. Overall, the company has posted an average beat of 14.45%.

CONATUS PHARMA Price and EPS Surprise

 

CONATUS PHARMA Price and EPS Surprise | CONATUS PHARMA Quote

Let’s see how things are shaping up for the third quarter of 2016.

Factors at Play

With no approved product in Conatus’ portfolio at the moment, the company does not generate revenues yet. Hence, investor focus is expected to remain on the company’s progress with emricasan, a first-in-class, orally active pan-caspase protease inhibitor, being developed for the treatment of patients suffering from chronic liver disease.

During the second quarter (May 2016), Conatus announced positive top-line data from the three-month, open-label, second stage of the phase II liver cirrhosis study on emricasan. Conatus also plans to initiate additional studies – ENCORE-PH, ENCORE-LF and ENCORE-XT on emricasan under the ENCORE program on a staggered basis through early 2017.

Meanwhile, operating expenses at the company are expected to rise, particularly research and development expenses, due to continued investment toward the development of emricasan.

What Our Model Indicates

Our proven model does not conclusively show that Conatus is likely to beat estimates 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 be able to beat earnings. 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 the Most Accurate and the Zacks Consensus Estimate both are at a loss of 32 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank:Conatus carries a Zacks Rank #3.

We caution against stocks with a Zacks Rank #4 and #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 these have the right combination of elements to post an earnings beat this quarter.

Infinity Pharmaceuticals, Inc. is expected to report its results on Nov 3. It has an Earnings ESP of +5.81% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Ariad Pharmaceuticals Inc. is +5.26% and has a Zacks Rank #2. The company is expected to release results on Nov 1.

Aerie Pharmaceuticals, Inc. has an Earnings ESP of +8.57% and carries a Zacks Rank #3. It is scheduled to report its results on Nov 2.

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